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Spring Budget 2017

If you would like a copy of the Spring budget/statement please email us here

 

 

ATED Reports - Annual Tax on Enveloped Dwellings
Time might be running out to make ATED reports. If your property is held within, among other non natural entities, a non UK resident company and was valued at £1 million or more on 1 April 2012 (or the date of purchase if later) you must make an ATED report to HMRC.

Usually this report is due by 30 April. This is the case even if your property is commercially let throughout the period. However, where a property has first fallen within the reporting regime because it is caught by the new £1 million threshold the reporting deadline has been extended for 2015/16 only to 1 October 2015. If the property is covered by one or the exemptions, such as being commercially let, you will also have to pay the ATED charge. 

Properties valued at £2 million or more on 1 April 2012 still have to be reported by 30 April 2017

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Please please email us here if you require more information or help making an ATED report.
 

Extension of CGT to non residents
HMRC have issued their proposals for the extension of CGT from April 2015. We will issue our more detailed thoughts shortly but in the meantime the proposal is that gains will be charged at 18% & 28% for individuals, 20% for non resident companies and the ATED related gain will remain at 28%. There will be an opportunity to rebase values at the April 2015 value, time apportion the gain or opt for neither!


Autumn Statement to be delivered on 3 December
The Autumn Statement 2014 will be delivered by the Chancellor of the Exchequer, George Osborne, on Wednesday 3 December.


Extension of CGT & UK property to non residents - HMRC consultation document released.
The HMRC document runs to 35 pages but a summary can be foundhere where a copy can also be downloaded. In effect it appears that only gains from April 2015 will be assessed. Therefore there will be some form of rebasing or time apportionment.UK resident and non resident individuals will then be assessed in the same way on gains with the same rates of CGT.Non resident companies will either be assessed to gains under the ATED regime (where not commercially let) or where not caught by ATED associated gains assessed to tax on a tailored rate although this rate has yet to be announced.

 

UK Budget Review 2014 Click here for your personal expatriate copy. 

 

 

1 February 2014
Tax Return deadline

If you have not submitted your tax return yet then you are probably too late and will face a £100 penalty. HMRC did announce an extension until (we believe) 15 February but only if you had already contacted HMRC for a tax reference number or new online access details.

 

 

The next deadline to worry about is 28 February at which time a 5% surcharge for any tax unpaid will become due. This is in addition to penalties and interest.

 

 

5 December 2013: Autumn Statement
CGT & UK property

The Chancellor announced further measures that he claimed will ensure that those with the means to do so to pay their fair share of tax. The government therefore plans to introduce capital gains tax on future gains made by non-residents who dispose of UK residential property from April 2015. A consultation on how best to introduce the new capital gains tax charge will be published in early 2014

 

 

Further updates on the Autumn Statement will be sent by email to those on our mailing list. If you would like to be included please contact us on mjh@mjhtax.co.uk

 

 

 

28 November 2013: HMRC Turnaround times issued
Christmas may be on the horizon but perhaps buying those gifts by Christmas Eve is not the only deadline that should be in your diaries.
HMRC have just announced their turnaround times for new registrations, so if you need to authorise a new tax agent or need to register for self assessment you may need to give that more priority than your Christmas card list as it could take up to six weeks

 

 

 

14 November 2013: Meetings in Hong Kong
Martin Holden will be in Hong Kong again from 18 to 22 November inclusive. If you would like to meet with Martin to discuss UK tax issues or any related financial matter, maybe UK property, tax returns, pensions, domicile or the Double Tax Treaty then please do not hesitate to contact us to arrange a meeting.

 

 

 

31 October 2013: Paper Return Deadline 
The deadline for submitting paper returns is midnight today. If you need to submit a personal tax return after today you will need to do so by online filing.

 

 

 

13 September 2013: Are you a High Income parent - have you registered for Self Assessment
Parents who earned over £50,000 during 2012/13 where one or other of the parents were in receipt of child benefit after 7 January have until 5 October to register for Self Assessment and pay the High Income Child Benefit charge. This income must be reported by 31 January 2014 with the charge paid by the same date. Failure to register for Self Assessment by 5 October 2013 can lead to a penalty of 100% of the charge due.


24 July 2013: Second payment on account deadline - 31 July approaching
If you have additional tax to pay then the second payment on account is due at the end of this month. If you believe that your income tax liability is likely to be less for 2012/13 then you can make an application to reduce your payments on account.

 

 

13 June 2013: New Disclosure Agreements - Jersey, Guernsey & Isle of Man
Disclosure agreements have been put in place with the above that involve a planned automatic exchange of information from 2015 on all accounts held in these offshore areas. They include a disclosure facility to allow UK resident investors with accounts to come forward and settle their past UK tax affairs before information on their accounts is automatically shared between the governments. Similar arrangements are expected to be announced for Luxembourg. 

Anyone who has an undeclared account in any of these offshore islands should take professional advice immediately in order to obtain the best tax deal possible. That can involve penalties at a low rate of 10% or 20%, in some cases, compared to penalties of up to 100% where HMRC discover the under payment themselves. The disclosure facility operates from 6 April 2013 until September 2016 although it will not be open to individuals already under investigation but will cover liabilities dating back to April 1999 at the earliest. 

9 May 2013: Some HMRC updates

HMRC have issued their updated guidance on the Statutory Residence Test. Are you a winner or loser? May 2013 - 2011/12 tax returns
Is your tax return for 2011/12 still outstanding. If so you will probably now be charged a daily penalty of £10 a day for up to 90 days while it remains unsubmitted. This is in addition to the automatic penalty of £100 for late submission plus another £300 if it is six months late.

 

 

  • HMRC have confirmed the abolition of the concept of Ordinary Residence. This will have an impact on UK Domiciliaries ability to claim tax relief on non UK income.
  • Guidance on the new operation of Overseas Workday Relief has been announced. This confirms the restriction on years that the "relief" can be claimed and limits it to Non Domiciliaries.
  • HMRC confirm to us again that all Non Resident Companies holding UK rental property will be issued with tax returns.

 

21 March 2013 Statutory Residence Status (SRT)
Our residence and domicile page has been updated to include a summary of the SRT. This is supposed to simplify the rules surrounding those individuals who are leaving and arriving in the UK. Have a read and see whether you agree.

20 March Budget Day 2013
Some updates

 

  • Income Personal Allowances are to increase to £10,000 but not until 2014.
  • Income Tax and Capital Gains Tax Rates remain as previously announced.
  • The rate at which Higher Rate tax becomes due will be £32,010 (above the personal allowance).
  • Corporation Tax Rate to be reduced to 20% for all companies by 2015. 
  • Statutory Residence Test to be introduced from 6 April 2013.
  • Concept of Ordinary Residence is to be abolished from 6 April 2013.
  • Overseas Workday Relief to be restricted to tax year of arrival and two subsequent tax years and to non domiciliaries only.
  • Amount that can pass free of Inheritance Tax from a UK domiciled spouse to a non UK domiciled spouse to be increased from £55,000 to the nil rate band in operation (currently £325,000).
  • The ability for non domiciliaries to opt for UK domicile for Inheritance Tax purposes to be introduced.
  • Capital Gains Tax to be introduced for UK property valued at over £2 million where it is held by certain non natural persons.
  • Annual Tax to be levied on residential property valued at over £2 million and held by non natural persons.
 
4 February 2013
Tax Return deadlines & penalties
The tax return deadline for 2011/12 tax returns may have passed and over 9.6 million tax returns may have been submitted to HMRC but that doesn't mean that the deadlines are over.

If you have not submitted your tax return for 2011/12 then you will already have incurred a £100 non refundable penalty. On 28 February a 5% surcharge for any tax still unpaid will be levied. After three months a daily penalty of £10 becomes due up to a maximum of £900 before a further £300 penalty after six months. 

Subsequent penalties mean that a tax return that is six months late can accrue penalties of £1,300 even if no tax is due.

21 September 2012
HMRC offer tax amnesty for 2009/10 tax returns
HMRC are offering an "amnesty" for those people who have tax returns outstanding from 2009/10. In truth they are just offering to mitigate any penalties that may be due as if the submission is an unprompted one. Nevertheless it does make it easier to minimise penalties. Therefore if you still have a tax return outstanding or you have an unreported liability for that year you should urgently take tax advice.

16 September 2012
HMRC collect £500m in extra tax
It has been reported by HMRC a new unit that specialise in the taxation of the country's most wealthy people has  brought in an extra £500m in tax since it was set up in 2009. No doubt this will have been a mixture of additional tax, interest, surcharges and interest and reinforces the need to ensure that annual tax returns are submitted accurately and timely under Self Assessment.

28 August 2012
Amending electronically submitted returns

 

Did you know electronically submitted "Amended" tax returns must be filed online within 12 months of the due date? Miss the date and you’ll have to file paper returns.

24 August 2012
Life insurance time apportioned reductions
HMRC are inviting views on reforming the rules for time apportioned reductions reflecting a policyholder’s period of residence outside the UK, for the purposes of the chargeable event gain regime for life insurance policies.

 
The closing date for comments is 5 November 2012.
 
HMRC issues penalties for missing self-assessment returns
Harsh penalties for late filing of self-assessment forms has come into force and HMRC have started sending out penalty letters to half a million people who have not lodged their 2010-11 tax returns.
The new penalties will be for a minimum £1,200, including a maximum £900 in daily penalties for non-filing and a further late-filing penalty of £300 or five per cent of the tax due (whichever is higher). 
The latest penalties are in addition to £100 late-filing penalties for missing the 31 January filing deadline, which were sent out in late February and early March.
 
10 August 2012
The attribution of gains to members of closely controlled non-resident companies 
HMRC has published a consultation document seeking views on proposals for the reform of two anti-avoidance tax law provisions: (1) gains attributed to members of non-resident closely controlled companies, and (2) the transfer of assets abroad. The closing date for comments is 22 October 2012. 
 
27 July 2012
Burger and coke giants to waive Olympic tax breaks 
Corporate giants McDonald's and Coca-Cola have bowed to online consumer pressure and agreed to turn down generous Olympic tax exemptions granted by the Government. 

Campaigners say the exemptions are worth tens of millions of pounds to the companies. Fellow Olympics sponsors Samsung, Visa, Panasonic and US chemical giant Dow are being urged to join the exodus. 
Pressure group 38 Degrees, says its online petition - calling on sponsors to reject the exemptions - has amassed over 160,000 signatures after campaigners said the tax breaks turned the Olympic venues into ‘offshore havens’. 

 

 

Contact us for more information

 

 

 

 

 

 

They include a disclosure facility to allow UK resident investors with accounts to come forward and settle their past UK tax affairs before information on their accounts is automatically shared between the governments. Similar arrangements are expected to be announced for Luxembourg.
 

Anyone who has an undeclared account in any of these offshore islands should take professional advice immediately in order to obtain the best tax deal possible. This can involve penalties at a low rate of 10% or 20%, compared to penalties of up to 100% where HMRC discover the under payment themselves. The disclosure facility operates from 6 April 2013 until September 2016 although it will not be open to individuals already under investigation but will cover liabilities dating back to April 1999 at the earliest.

 

31 May 2013 UK - Swiss Disclosure Agreement
31 May is the deadline for making elections under the Agreement. By this date any UK resident account holders will either have to prove their residence is outside of the UK, elect for disclosure to the UK authorities or accept a "tax penalty" of up to 48% of the capital and future withholding tax.

 

The deadline for submitting annual tax returns is fast approaching. If a return has been issued to you on time then it must be submitted online by midnight on 31st to avoid an automatic penalty of £100. Incidentally, should your return be six months late the penalties can add up to £1,300.

If you have a tax liability but have not notified HMRC of your sources of income then you should pay the tax due by 31 January even if a tax return has not been issued. Otherwise you could face penalties of up to 100% of the tax due.

 

We have laid out a summary of the main points that are likely to affect individuals, expatriates and holders of UK property through non resident entities

 

Income Tax

Personal Allowances
The income tax personal allowance will increase from £9,440 to £10,000 in 2014/15, and further increase to £10,500 in 2015/16. The higher allowances for those born before 6 April 1948 will not be increased.

The basic rate limit will reduce from £32,010 to £31,865 in 2014/15 and further reduce to £31,785 in 2015/16.

However, the higher rate threshold will increase from £41,450 to £41,865 in 2014/15 and further increase to £42,285 in 2015/16.

Transferable tax allowances for married couples and civil partners
With effect from 6 April 2015 it will be possible for one spouse or civil partner to elect to transfer £1,050 of their personal allowance to their fellow spouse or civil partner, providing that neither the transferor nor transferee are higher rate taxpayers. This will provide a financial benefit where one spouse or civil partner has an income less than their personal allowance.

From 2016/17 the transferable amount will be 10 per cent of the personal allowance.

 

Residence & Domicile

Residence
No amendments were announced with regard to the way the Statutory Residence Test (SRT) will be applied. Of course 5 April 2014 will see the end of the first year that the SRT has been in force and the how it will be reported on annual tax returns.

Artificial use of dual contracts by non domiciliaries
A measure is to be introduced that is directed at UK resident non-domiciles paying income tax on the remittance basis who use separate employment contracts for UK and overseas duties with the same or associated employers.

The measure will tax non-domiciles on the overseas employment income it identifies according to the 'arising' basis. That is, the income caught by this measure will cease to be eligible for the remittance basis tax treatment.

 

Capital Gains Tax (CGT)
There are no changes in the rates of tax. The annual exemptions have been increased in line with inflation.

The individual exemption will increase to £11,100 from 6 April 2015.

 

UK Property

Consultation document on non residents owning UK property
HMRC have announced that a consultation document on non UK residents owning property will be issued shortly. Any change is due to take effect from April 2015 onwards and is no more than we already knew.

Private Residence Relief
As previously announced, from 6 April 2014 the final period exemption will be reduced, in most cases, from 36 months to 18 months.

UK residential property held by certain non-natural persons

All corporate and other 'envelopes' affected by the new Annual Tax on Enveloped Dwellings (ATED) band will also be subject to capital gains tax on disposal of the properties held, at a rate of 28 per cent. This extension will take effect from 6 April 2015 for properties worth more than £1 million and not more than £2 million. The charge to capital gains tax will only apply to that part of the gain that is accrued on or after that date. The extension to the ATED-related charge will take effect from 6 April 2016 for properties worth more than £500,000 and not more than £1 million.

Annual Tax on Enveloped Properties (ATED)
The rules on the ATED will also be revised in Finance Bill 2014 to reduce the threshold down of £2 million down to £500,000. From 1 April 2015, a new band will come into effect for properties valued at more than £1 million but not more than £2 million with an annual charge of £7,000. From 1 April 2016 a further band will come into effect for properties with a value greater than £500,000 but not more than £1 million with an annual charge of £3,500. There will be transitional rules for the £1 million to £2 million band requiring returns to be filed on 1 October 2015 and payment by 31 October 2015.

 

Capital Taxes

IHT and foreign currency account
Property which is situated outside the UK and which belongs to, or was settled by, a non-UK domiciled individual is ‘excluded property' and is not chargeable to IHT.

Under the current legislation non-sterling deposits held in a UK bank account by a non-UK domiciled and non-UK resident individual are not excluded property but are not chargeable to UK IHT.

Legislation will be introduced in Finance Bill 2014 to treat funds in a foreign currency bank account in a similar way to excluded property. A liability will be disallowed as a deduction from the value of the estate where the borrowed funds have been put into a foreign currency bank account so that the funds are not chargeable to IHT on death.

Trusts Simplification

As previously announced the filing and payment dates for IHT relevant property trust charges are to be simplified. Income arising in such trusts, which remains undistributed for more than five years, will be treated as part of the trust capital when calculating the 10 year anniversary charge.

 

Pensions, Savings & Investments

The new ISA and changes to Junior ISA and Child Trust Fund (CTF)
From 1 July 2014, ISAs will be reformed into a replacement product - the New ISA (NISA) and all existing ISAs will become NISAs. Key aspects:

  • The 2014/15 subscription limit will increase to £15,000
  • The full amount may be invested in a cash account (previously 50 per cent)
  • Investments may be transferred from a stocks and shares account to a cash account
  • A wider range of investments may be held in a NISA than in an ISA.

The amount that can be invested in a Junior ISA or CTF in 2014/15 will increase to £4,000.

 

Cutting the 10% tax rate on savings income
From 6 April 2015, the savings rate will be reduced from 10 per cent to 0 per cent and this rate will be available on up to £5,000 of savings income. Non-savings income is always taxed before savings income. For 2015/16, if an individual has total income of less than £15,500, he or she will be able to register to receive tax-free savings, from their bank or building society.

Increasing pension flexibility 
Under the current legislation when a member of a defined contribution pension scheme retires he or she can normally take up to 25 per cent of their pension pot as a tax-free lump sum. If the individual wishes to withdraw the balance of the fund as a lump sum, it will be taxed at a rate of 55 per cent.

The balance of the pension pot is usually accessed either by purchasing an annuity, or by entering into capped or flexible drawdown. If the balance of the pension pot is under £18,000 (the trivial commutation) and the pensioner is over 60, the balance of the fund may be withdrawn as a lump sum.

From 27 March 2014:

  • The trivial commutation limit is increasing from £18,000 to £30,000
  • The amount of guaranteed income needed in retirement to access flexible drawdown will reduce from £20,000 per annum to £12,000 per annum
  • Any small pension pot of less than £10,000 may be taken as a lump sum - the current limit is £2,000

 

  • The number of small pension pots that may be accessed as a lump sum will be increased from two to three.

 

From April 2015, a member of a defined contribution pension scheme who is over 55 will be able to withdraw their pension pot as and when they want - but subject to their marginal rate of income tax in the year of withdrawal. Individuals will be able to access free, unbiased guidance on the methods available to them to access their pension pots.

Pension Liberation
In order for a pension scheme to be registered with HMRC it must provide all the particulars that HMRC requests. HMRC must register the scheme unless they consider that it contains incorrect information or a false declaration. HMRC may only withdraw approval of a pension scheme in very limited circumstances.

There is a growing problem with individuals attempting to access their pension schemes before they reach retirement - HMRC is therefore being granted additional powers in Finance Bill 2014 so that they can refuse to register a pension scheme, or de-register an approved scheme, if they consider that the scheme administrator is not a fit or proper person or that the scheme has been established for improper purposes.

 

Value Added Tax

Place of supply rules and introduction of a mini one stop shop (MOSS)
As announced in the 2013 Budget, legislation is to be introduced to tax Intra-EU B2C supplies of telecommunications, broadcasting and e-services in the Member State in which the consumer is located. The operative date for this change is 1 January 2015 and on the same date, MOSS will be introduced to give suppliers of these services the choice of registering for VAT only in the UK and completing a single VAT return 

 

And Finally . . . .

Manchester Grand Prix 2014
Should you be competing in the Manchester Grand Prix This measure provides an exemption from UK income tax for non-UK resident sportspeople on any income received as a result of their performance at the Glasgow Grand Prix 2014, or as a result of any activity carried out between 5 and 14 July 2014, where the main purpose is to support or promote the Glasgow Grand Prix.

 

 

11February 2014
Returning to the UK?

If you are returning to the UK after a period of non residence you should plan the timing of your return carefully. Before the Statutory Residence Test was introduced you could probably have returned here at any time of the year and declared that you were back permanently or for at least two years. That would have led to the tax year being split into a period of non residence and residence for tax purposes.

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