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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 firstname.lastname@example.org
28 November 2013: HMRC Turnaround times
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.
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.
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
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
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
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
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.
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.
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.
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 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:
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.
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.
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.
MJH Tax Ltd
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