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Frequently Asked Questions

Have a question? Start here.

What exactly do you do?

We offer bespoke tax planning solutions for individuals and businesses helping them legally minimise their tax burden in a variety of ways. We also help with accounts.

Can you save me tax?

In most cases, probably yes. This is more likely if you haven’t done any tax planning before.

Isn’t it wrong or illegal?

No – tax law allows you to administer your affairs in the most tax efficient manner possible.

Which tax can I save?

Potentially all taxes can be mitigated, some less than others. The main taxes are Income Tax, Capital Gains Tax, Corporation Tax, Stamp Duty and VAT (quite a lot of taxes!)

Why can’t my accountant just do it?

As with most things in life the best advice is usually given by those who specialise in a particular field or topic as opposed to getting a generalist to advise on an specialist area.

Do you sell tax “schemes”?

Tax schemes usually are “off the shelf” high risk tax planning products which are almost sold like insurance products. In such cases HMRC require you to disclose these on your Tax Return. Our tax planning is in-house and based on your circumstances, meaning they are completely unique.

I am being investigated by the tax man – what did I do wrong?

Some tax investigations are random others are as a result of HMRC obtaining some sort of intelligence. The important thing to remember is that early intervention by a tax investigation specialist could resolve the dispute relatively quickly; what not do to is to attempt to correspond with the tax man yourself as you could unknowingly put the proverbial “foot in it”.

I heard I have to pay up to 40% tax on death on my assets is this true?

Partly. Inheritance tax is payable on ALL WEALTH above the inheritance tax threshold. However, there are some simple ways to mitigate inheritance tax.

What are your costs?

We have a fixed cost structure so there are no surprises. However, we aim to keep costs low at all times and be the most competitive in market given the expertise and experience we have. We have a small motto at Shipleys: “we’re happy to talk problems, but ideas cost money…”

Latest news & blogs…

Taxman Targets Online Sellers

FAQs Shipleys Tax Advisors

WITH THE GROWING popularity of online selling platforms like TikTok and Etsy, HMRC has increased attention on the tax implications for those earning income from these sources.

In today’s Shipleys Tax note we briefly look at what’s happening and what you should do avoid falling foul of these new tax measures.

What’s the deal?

From the 1st of January 2024, digital marketplaces such as eBay, Vinted, Airbnb, and Etsy, have been mandated to gather and report details of seller transactions and income to HMRC. These platforms have until January 2025 to report sellers’ income from the previous year. This measure is part of a broader initiative to ensure tax compliance and to capture undeclared income from individuals who trade with the intention of making a profit but fail to report their earnings correctly.

The targeted platforms include:

  • eBay
  • Vinted
  • Airbnb
  • Etsy
  • TikTok

From the 1st of January 2024, digital marketplaces such as eBay, Vinted, Airbnb, and Etsy, have been mandated to gather and report details of seller transactions and income to HMRC.

These platforms will need to collect and report the following information:

  • Seller Details: Identification of the sellers.
  • Transaction Details: Information on the transactions made by the sellers.
  • Income Information: The income generated by the sellers through these platforms.

This measure is part of the UK’s implementation of the OECD rules to improve international cooperation and tax compliance.

While there’s been talk in the media of a new ‘side hustle’ tax, it’s important to clarify that no new taxes have been introduced. However, understanding the existing tax laws and how they apply to online selling is crucial.

What should you do?

As an online seller in the face of HMRC’s focus on side hustles, it’s important to take proactive steps to ensure you’re on the right side of tax laws. Below we have summarised the key issues you need to consider.

Are you Trading or Hobby-ing?

First and foremost, determine whether your online selling activities constitute a hobby or a trade. This is tricky at best and HMRC considers several factors to make this distinction. These include the frequency of transactions, profit motive, nature of the goods, and sale method. Regular sales of new or self-made items with the intent of profit are typically considered trading, whereas selling personal, used items occasionally is generally seen as a hobby. For online sellers, understanding these nuances is critical to accurately ascertain tax obligations.

Trading Allowance

One key aspect is the trading allowance, which allows individuals to earn up to £1,000 annually from self-employment, including online selling, without the need to declare this income to HMRC. This is particularly beneficial for small-scale traders or those starting out. However, it’s vital to note that once your income surpasses this threshold, the entire amount becomes reportable.

First and foremost, determine whether your online selling activities constitute a hobby or a trade. This is tricky at best and HMRC considers several factors to make this distinction

For those earning profits exceeding £1,000 from online selling, income tax and National Insurance contributions may be applicable. These profits must be reported via a self-assessment tax return, even if no tax is due, such as when profits fall below the personal allowance (currently £12,570. This rule also applies if you are using online selling as a secondary income source, with the £1,000 limit still relevant.

If you have already received income over the £1,000 allowance, or if you have received a ‘nudge’ letter from HMRC indicating you may have undeclared income, take immediate action. Do not ignore these letters; they are a prompt for you to review your tax situation.

Record it

Maintain good records of all your online selling activities, including receipts, listings, and correspondence. This documentation will be invaluable for completing your tax return accurately. If your online selling is a side hustle in addition to your main job, remember that different rules might apply, especially if your main income already exceeds your personal allowance.

Consider the use of digital tools and accounting software that can assist in tracking your earnings and expenses, making the process of reporting to HMRC more straightforward.

Information Sharing by Online Platforms

It’s also important to be aware that online selling platforms may share information with HMRC, including seller identities, transaction volumes, and values. This increased transparency aims to ensure tax compliance and makes accurate self-reporting by sellers more important than ever.

Maintain good records of all your online selling activities, including receipts, listings, and correspondence. This documentation will be invaluable for completing your tax return accurately.

Conclusion

If you’re unsure about your tax position or obligations, consult with a tax professional. A tax expert can provide clarity on your individual circumstances, help you understand your tax liabilities, and ensure you’re taking advantage of any allowable deductions or exemptions. This step is not just about compliance; it’s also about optimizing your tax situation.

For further assistance or queries, please call 0114 272 4984 or email info@shipleystax.com.

Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.

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Tax on Cryptoassets – HMRC’s new disclosure service

FAQs Shipleys Tax Advisors

HMRC’s new Cryptoasset disclosure service – what it means for you

IN THE FAST-moving landscape of digital finance, HMRC has taken a significant step by issuing new guidance for individual to voluntarily disclose unpaid taxes on income or gains derived from cryptoassets. This development is crucial for taxpayers in the UK as it has significant implications for those not self-declaring any potential tax due on cryptoassets.

In today’s Shipleys Tax brief we look at HMRC’s new voluntary disclosure service for cryptoassets and why it’s important for taxpayers to consider their crypto tax affairs as timely disclosure can mitigate penalties and interest.

What is the new HMRC voluntary disclosure service?

Much like other voluntary disclosure campaigns (such as the Liechtenstein Disclosure Facility (LDF) and the Buy-to-Let campaign) HMRC’s new voluntary disclosure service for cryptoassets is designed to encourage taxpayers to come forward and disclose any unpaid tax on cryptoassets, providing an opportunity to settle their affairs while potentially facing lower penalties than if the underpayment were discovered by HMRC. It underlines the importance of being proactive in “fessing up” and looks to offer taxpayers more favourable terms compared to regular HMRC investigations.

https://www.gov.uk/guidance/tell-hmrc-about-unpaid-tax-on-cryptoassets

Key Aspects of the Disclosure Service

  1. What cryptoassets are covered? The voluntary disclosure service covers a range of cryptoassets for tax purposes, which typically includes exchange tokens like Bitcoin, utility tokens, and non-fungible tokens (NFTs). This encompasses assets used as a means of exchange, for investment, to access particular goods or services, or those representing ownership of a unique asset or content.
  1. Reasons for Underpayment: HMRC categorises underpayment reasons into three distinct sections:
    • Innocent Error: This implies that reasonable care was taken, but an error still occurred. In such cases, the look-back period for underpayment is limited to four years.
    • Carelessness: If underpayment is due to carelessness, the look-back period extends to six years.
    • Deliberate Behaviour: This is the most serious category, involving intentional underpayment, and can lead to a maximum look-back period of 20 years.

Much like other voluntary disclosure campaigns… HMRC’s new voluntary disclosure service is designed to encourage taxpayers to come forward and disclose any unpaid tax on cryptoassets

  1. Penalties and Reductions: In HMRC’s framework, penalties for inaccuracies in tax returns and failure to notify can be reduced depending on the quality of disclosure. If taxpayers proactively disclose with a high level of transparency and detail, they may be eligible for reduced penalties. The reduction is based on the principle of how much assistance the taxpayer provides to HMRC: telling them about the error, helping HMRC understand the disclosure, and giving access to additional information if required. The more forthcoming and cooperative the taxpayer is, the greater the potential reduction in penalties.
  1. White Space Notes: A crucial recommendation by HMRC is the inclusion of “white space notes” in disclosures (i.e. in their personal tax returns pages). These notes should detail the taxpayer’s reasoning and calculations, providing transparency in their self-assessment process.
  1. Payment Procedures: Lastly, HMRC has introduced comprehensive information on how and when to pay the owed taxes, simplifying the payment process for taxpayers.

Why This Matters for Taxpayers

Understanding HMRC’s new guidance is critical for individuals dealing in cryptoassets to ensure compliance before errors are discovered by the authorities. The advantages include potentially reduced penalties for disclosure, and the opportunity to rectify one’s tax affairs voluntarily.

However, it also implies increased scrutiny and a possible signal of stricter enforcement moving forward. Taxpayers must weigh the immediate costs of disclosure against the risk of higher penalties and interest if discrepancies are found later by HMRC. The service highlights the increasing focus on cryptoassets by HMRC and the importance for taxpayers to stay abreast of their obligations and take professional advice.

How Can We Help?

As a premier UK tax advisory firm, we specialize in guiding clients through the intricacies of tax laws, especially in emerging areas like cryptoassets. Our expertise lies in:

  • Assisting in accurate self-declaration based on HMRC’s categories.
  • Advising on potential penalties and how to minimize them.
  • Helping clients understand the implications of their crypto transactions on their tax liabilities.

Understanding HMRC’s new guidance is critical for individuals dealing in cryptoassets to ensure compliance before errors are discovered by the authorities

Conclusion

HMRC’s new guidance on voluntarily disclosing unpaid tax on cryptoassets marks a significant step towards clearer tax compliance in the digital age. For individuals engaged in crypto transactions, it is essential to understand these guidelines and consider seeking professional advice to navigate this complex area.

Although the process offers an opportunity to correct past oversights with potentially reduced penalties, the complexity of disclosure and the evolving tax landscape for cryptoassets demand professional guidance to navigate effectively. Individuals are encouraged to assess their circumstances, utilise the service if necessary, and seek expert advice to optimise their tax position.

For further assistance or queries, please call 0114 272 4984 or email info@shipleystax.com.

Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.

Want more tax tips and news? Sign up to our newsletter below.

Autumn Budget Statement 2023

FAQs Shipleys Tax Advisors

IN A LARGELY uninspiring speech and, amidst declining inflation rates, the Chancellor’s Autumn Statement delivered some fairly unspectacular tax cuts.

In today’s Shipleys Tax note we give you a snapshot of what you need to know as an employer, self-employed or business.

National Insurance Takes Centre Stage

Following much vaunted speculation post-October’s inflation report, expectations were high for potential reductions in corporation tax, inheritance tax, and National Insurance (NI). The final decision primarily impacted NI, affecting both employees and self-employed individuals. However, the effective dates for these changes vary.

Employee NI Rate Cut from January 2024

Effective from 6 January 2024, the Primary Class 1 main NI rate will decrease from 12% to 10%. This alteration, reminiscent of the mid-year modifications in 2022/23, necessitates payroll software updates. It’s crucial for businesses to ensure these updates are implemented before processing January’s payroll. Note: The rate for earnings above the Upper Threshold remains at 2%.

Significant Changes for Self-Employed NI Contributions from April 2024

Starting 6 April 2024, Class 2 NI contributions, mandatory for the self-employed, will be abolished. Self-employed individuals with profits between £6,725 and £12,570 will maintain access to contributory benefits like the state pension through NI credits without paying contributions. Voluntary Class 2 payments remain an option.

Additionally, the main Class 4 NI rate will be reduced from 9% to 8%.

Extended NI Incentive for Hiring Veterans

The beneficial NI incentive for recruiting veterans is now extended until 2025.

Expansion of Cash Basis Accounting for Self-Employed Businesses

The Autumn Statement also brought some good news for self-employed businesses using cash basis accounting. The turnover limit for this accounting method has been removed. Previously, businesses had to switch to the accruals basis after exceeding £300,000 turnover

Business tax

  • Capital allowances – permanent full expensing – Full expensing is now a permanent tax break for companies. The Spring Budget 2023 introduced two new temporary first-year allowances. For expenditure on plant or machinery incurred on or after 1‌‌‌ ‌‌April 2023 but before 1‌‌‌ ‌‌April 2026, companies can claim a 100% first-year allowance for main rate expenditure – known as “full expensing” – and a 50% first-year allowance for special rate expenditure. Today’s announcement makes full expensing and the 50% first-year allowance permanent by removing the expiry date of March‌‌‌ ‌‌2026.
  • The EIS and VCT schemes are extended for another decade.
  • The tax reliefs for Investment Zones and Freeports are extended to ten years.

More to follow.

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