Self Assessment

Posted on July 31st, 2011

Those with straightforward tax affairs who are paid via PAYE may never have to complete a self assessment tax form. For the rest, including the self employed, company directors, trustees and those with a foreign income completion of an annual self assessment form is a necessity.

When it comes to paying tax a few of those who completed a self assessment form will simply pay as usual via PAYE with an adjusted tax code. However, the majority will have two dates circled in red on their calendars; 31 January and 31 July. These are the dates when bi-annual tax payments are due. In effect, those paying tax for the tax year 2010/2011 will have to have made a first interim tax payment on 31 January 2011, a second interim payment on 31 July 2011 with a final balancing payment due on 31 January 2012.

The interim payment due on 31 July is usually preceded by the receipt of a statement advising the amount of tax to be paid. This year, HMRC have substantially underestimated the number of statements to be sent out and this has lead to delays with up to 500,000 statements expected to be issued late. HMRC have advised those affected to pay the amount owed within 30 days of receipt of the statement in order to avoid any penalties being applied.

There are some tax payers who will not be affected by this delay in issuing self assessment statements. These include:
• Those paying on a monthly budget plan
• Those paying by direct debit
• Those whose annual tax is less than £1,000 – generally resulting in interim payments not being required

As tax mitigation specialists Newshams are able to give advice on how tax may affect any private or business transaction and how to put in place an effective mitigation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce your tax costs or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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30th July 2011

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New projects for the Office of Tax Simplification

Posted on July 18th, 2011

The Exchequer Secretary, David Gauke, has written to the Office of Tax Simplification (OTS) asking them to review three further areas of taxation. The aim of these reviews is to streamline and simplify the process of tax calculations thereby reducing cost and hopefully eliminating the chance of error. The three areas concerned are:

Taxation of Small Businesses
Whilst the OTS has already been looking at the tax burden for small businesses this second stage will focus on examining “the scope for improving HMRC’s administration of the tax system for small business”. In particular the OTS has been asked to look at:
(i) Alternative systems for taxing the smallest unincorporated businesses. This review will encompass a review of systems in place in other countries as well as a recommendation on the size of business to be affected.
(ii) The case for a relief for disincorporation. The OTS interim report suggested that many smaller businesses were prevented from ceasing to operate as incorporated entities due to cost and complexity. The review will look at the possibility of offering a tax relief for disincorporation alongside the wider implications of protection of shareholders and legislative conflicts.

Employee Share Schemes
The OTS interim review on business taxes highlighted the complexity and costs incurred in maintaining employee share schemes. The OTS has therefore been asked to carry out a two stage review looking at:
(i) The current four government approved share schemes (Save As You Earn (SAYE), Company Share Option Plans (CSOP), Share Incentive Plans (SIP), and Enterprise Management Incentives (EMI)). This review is to be completed by the 2012 Budget and is to focus on simplification of the schemes having regard to the implications for companies and their employees.
(ii) Non tax advantaged unapproved schemes. This review is to take place after the 2012 Budget and the full remit of this review will be announced in due course.

Pensioner Taxation
Recognising that many pensioners are subject to self assessment after retirement with multiple sources of income the OTS has been asked to make recommendations on the easing of the administrative burden for pensioners. This review will need to include the implications of the current review on merging income tax and NI as well as current proposals for a flat rate state pension. The OTS has been asked to produce an initial report by the 2012 budget.

The move to simplify the tax rules in all of these areas is to be welcomed. However, the extent to which any changes that are recommended are beneficial to taxpayers and achieve their aim of simplification will, of course, only be apparent once the OTS produces its reports and the government decides how to act on the recommendations.

As tax mitigation specialists Newshams are able to give advice on how tax may affect any private or business transaction including employee share schemes and how to put in place an effective mitigation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce your tax costs or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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18th July 2011

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Balancing charity giving with bequests

Posted on June 28th, 2011

One of the “surprises” of the 2011 Budget was the announcement that the Government intended to reward those who leave money to charity after their death. Effectively the Inheritance Tax Charitable Relief scheme allowed those leaving 10% of their estate to charity would receive tax relief of the equivalent amount.

The consultation process aimed at refining the details of how this scheme would operate in practice is now under way with suggestions abounding. Two such have come from HMRC spokesman Richard Kent this week. The first is that the legislation may require a set clause to be inserted into the will of those wanting to leave a bequest under this arrangement. Richard believes that such a clause would remove the difficulties which may arise when the value of an estate moves substantially from the amount predicted when the will is drawn up as well as arguments on whether the 10% is calculated before or after fixed sum legacies.

However, Mr Kent also warns that the legislation may have a detrimental effect on the overall level of charitable giving. With 10% being the optimum amount to leave, whilst those who may have left less than this percentage might be encouraged to increase their giving, those previously intending to leave more to charity might be tempted to leave less.

With HMRC already investigating the values placed on estates as well as getting tough on the “gifts within seven years of death” rule, those contemplating drawing up a will need to take extra care to maximise legitimate tax reduction opportunities which may be available to them. As tax mitigation specialists Newshams are able to give advice on Inheritance Tax and other taxes, how tax may affect any private or business transaction and how to put in place an effective Inheritance Tax strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce your tax costs or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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28th June 2011

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What price larger homes

Posted on June 23rd, 2011

The head of communications at the Home Builders Federation (HBF) has recently admitted that at the moment the trend for building new homes has moved towards larger properties. Commentating on the current state of the house build market Steve Turner went on to say that “Builders will obviously build what they can sell. People that already have a home and are moving home tend to be buying bigger houses, so that is the market that developers are targeting because it is the only market that people are currently buying in.”

Mr Turner’s observations seem to reflect the current state of the housing market in the UK at present. A combination of financial uncertainty and falling house prices has resulted in a flat market for those looking to move or trade up whilst prices have not fallen far enough for those looking to step onto the housing ladder for the first time.

Even for the main movers towards the top of the housing tree, cost control is vital to ensure an affordable move. One such cost is that of Stamp Duty Land Tax (SDLT). This is payable upon the transfer of property, whether freehold or leasehold, private or commercial. With the top rate of SDLT at 5% for properties costing in excess of £1million, the tax can make a substantial difference to the feasibility of a property transaction.

With complex property transactions, particularly those linked to business transactions, it generally pays to consult a SDLT expert. However, many private property transactions, especially those in excess of £500,000, can also benefit from SDLT mitigation strategies, thus helping to ensure the cost effectiveness of a transaction.

As Stamp Duty Land Tax specialists Newshams are able to give advice on SDLT, how it may affect any private or business property transaction and how to put in place an effective mitigation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce the tax costs on your property transaction or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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23rd June 2011

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Calculating an Inheritance

Posted on June 16th, 2011

The recent HMRC investigations into small business tax, including that of plumbers and restaurants, have received fairly wide publicity. However, according to accountancy firm UHY Hacker Young, there is another area which HMRC have been quietly spotlighting over the past year and that is inheritance tax.

Over the course of 2010 HMRC investigated 9,368 inheritance tax valuations raising an additional £70 million in the process. Although inheritance tax generally only applies for estates in excess of £325,000 the rise in house prices over the past decade has lead to many being caught by the inheritance tax threshold. With average house prices in London now running at over £400,000 it could be tempting to undervalue property thus avoiding the tax.

As part of its review HMRC are advising beneficiaries to take care when valuing assets and in the case of property to either seek a number of valuations or engage a professional valuer. Those administering estates who are deemed not to have taken reasonable care could find themselves not only having to pay the outstanding tax but also a fine of up to the equivalent of the outstanding tax. An undervaluation of £10,000 could therefore leave the executors facing a payment of £4,000 missed tax plus a further £4,000 penalty.

Often it is not just the cost of property that needs to be taken into consideration. Gifts, particularly made in the last seven years of a life need to be reviewed as do investments, life policies and pension plans. Although deliberately undervaluing a property is not allowed there are some perfectly legal ways of mitigating the effects of inheritance tax. The sooner these are reviewed the easier it is to plan a tax mitigation strategy.

As tax mitigation specialists Newshams are able to give advice on Inheritance Tax and other taxes, how tax may affect any private or business transaction and how to put in place an effective mitigation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce your tax costs or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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16th June 2011

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Hope for UK Commercial Property

Posted on June 10th, 2011

The CB Richard Ellis monthly index of commercial property returns continues to bring hope of recovery within the sector. Overall the sector posted growth of 0.7% in May, capitalising on the 0.6% growth seen in April. Across the UK the picture is mixed. Within the capital returns for office accommodation rose by 1% against a fall of 0.5% over the rest of the country. Retail properties also strengthened in with an overall return rise of 0.7%. Industrial property continues to lag behind the other commercial property sectors, albeit slightly, with a return of 0.5% against 0.6% in the previous month.

Commenting on the results, Nick Parker of CB Richard Ellis commented that “What investors are increasingly finding attractive about offices in Central London is not just the income security afforded by large occupiers, but also that rents are enjoying significant uplift due to a combination of increasing demand for space and a restricted supply following the downturn.” However across the rest of the country demand is expected to continue to be patchy for some time to come.

Choosing commercial property to lease or buy can be a game of compromise. The choice of manufacturing premises may be defined by logistics and potential workforce whilst retail premises need to be in areas which will attract customers. Cheaper properties may therefore look good initially but turn out not to be the best long term cost/income effective solution. This means that the lower stamp duty land tax (SDLT) rates applicable to disadvantaged areas might not always provide the intended boost to commercial development. This is particularly true if SDLT on commercial property transactions can be mitigated

As tax mitigation specialists Newshams are able to give advice on SDLT and other taxes, how tax may affect any private or business transaction and how to put in place an effective mitigation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce the tax costs on your property transaction or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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10th June 2011

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Government releases housing land

Posted on June 8th, 2011

The Housing Minister, Grant Shapps, has today announced ambitious plans for Government and Council held land to be released for housing. With the aim of kick starting the house building industry and creating up to 25,000 jobs, the hope is to build 100,000 new homes on this land by 2015.

Every Government department with significant land banks is being required by the autumn to identify and publish plans to release land holdings to developers. To help ensure that no department tries to hold on to land the Minister has instituted twin external reviews. Firstly, property specialists will be tasked with challenging each department to identify the maximum amount of land available and secondly the Public Expenditure Committee is to closely review every proposal.

With Councils being encouraged to follow the government lead it is hoped that sufficient land will quickly be released for building. We will all be able to follow the progress of this review via a map to be released later this year showing all land and buildings currently under public ownership. Some land has already been earmarked for development including land in Bath which is to be freed up following the rationalisation of Ministry of Defence office accommodation, land in Oxfordshire freed following the closure of a hospital and the redevelopment of New Covent Garden Market in Vauxhall.

To help impoverished developers there are a variety of options including a build now pay later scheme which will allow developers to defer payments until properties are sold. It is hoped that the cost of the land will be fixed up front or developers may find themselves facing some interesting price and tax negotiations. Of course, the sale of properties attracts Stamp Duty Land Tax and this scheme, in addition to alleviating the housing shortage and providing employment, will create revenue generating opportunities for the Government.

As tax mitigation specialists Newshams will be following the progress of the release of public land with interest whilst continuing to provide advice on SDLT and other taxes, how tax may affect any private or business transaction and how to put in place an effective mitigation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce the tax costs on your property transaction or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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8th June 2011

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Newshams congratulates the RIBA award winners

Posted on May 25th, 2011

The Royal Institute of British Architects (RIBA) has announced the winners of the 2011 awards for architectural excellence. The 89 winners in the UK include a community hall in the Hebrides and a self build hideaway in the Lake District as well as fourteen schools and nine university buildings.

The awards also give a boost to UK Olympic preparations with the Velodrome receiving an award. Nicknamed the giant Pringle in honour of its crisp like curves the Velodrome is just one of many Olympic buildings which have already been completed in plenty of time for the Olympics next year.

Most notable among the award winners are seventeen private houses. Commentating on the awards this year the RIBA president, Ruth Reed, said that “this year’s winners show that in spite of a terrible worldwide recession, many exceptional buildings have been, and continue to be, built in the UK and overseas.”

Whilst many of these award winning buildings are unlikely to be offered for sale in the next few years, being linked to educational establishments and other public bodies, those that do may well command a premium in the light of the RIBA recognition. For these, as with all other buildings which are sold or leased, the question of Stamp Duty Land Tax (SDLT) will come into play. With the top SDLT rate currently set at 5%, the rate of SDLT can influence the outcome of a property transaction. Luckily for those affected there are some mitigation techniques which are available to reduce the transaction costs.

As tax mitigation specialists Newshams are able to give advice on SDLT, how it may affect any private or business transaction and how to put in place an effective mitigation strategy. We recently announced a new SDLT mitigation technique which can mitigate 100% of the SDLT in respect of property transactions in excess of £500,000. This technique is equally effective for commercial and private transactions whether freehold or leasehold.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce the tax costs on your corporate transaction or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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25th May 2011

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The Bribery Act 2010

Posted on May 19th, 2011

Following a delay caused by the need for additional consultation and clarification, the Bribery Act 2010 has received Royal Assent and will come into force on 1 July 2011. This Act aims to modernise the law in relation to bribery both within the UK and abroad.

The Ministry of Justice has issued a Quick Start Guide to the Act. The Guide starts by defining bribery as “giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly or to reward that person for having already done so.”

One of the reasons for the delay to the Act was the generally expressed concern that hospitality could have been deemed to fall under the definition of bribery within the new Act. This has been clarified with “reasonable and proportionate” hospitality not falling within the remit of the Act.

Penalties for failing to comply with the Bribery Act 2010 have been increased to a jail sentence of up to 10 years, and/or an unlimited fine for individuals or companies.

The Bribery Act 2010 applies to UK companies operating both within the UK and abroad as well as to overseas companies operating within the UK. It also applies equally to officials of the company as well as associated persons acting on behalf of the company. Organisations are required to apply the following 6 guiding principles when complying with the Act:
Proportionality
Top Level commitment
Risk Assessment
Due Diligence
Communication
Monitoring and Review

With the Act also applying to a company which fails to prevent a bribe being paid for or on its behalf it is essential that the guiding principles are incorporated within organisational procedures to provide some measure of defence. With less than two months to go, companies should ensure that they carry out appropriate assessments and training as soon as possible.

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19th May 2011

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The CIOT comments on SDLT Budget proposals

Posted on May 16th, 2011

Within the 2011 Budget, the chancellor, George Osborne, proposed various measures intended to tighten up on Stamp Duty Land Tax (SDLT) avoidance. These proposals form part of the Finance (No 3) Bill which is currently winding its way through Parliament. Due to the complexity of the Bill, whilst some of its clauses were debated by the House, others have been left for discussion by a Public Bill committee.

The Finance (No 3) Bill committee is next due to meet on 17 May and you can follow the progress of the bill on the following website address:
http://services.parliament.uk/bills/2010-11/financeno3.html

As interested parties, the Chartered Institute of Taxation (CIOT), among others, has forwarded a commentary on the proposals to the Committee. The CIOT has raised concerns about some of the proposals including:
• A missed opportunity to clarify “vendor” and “dwelling” in certain transactions
• The effect of introducing the “higher of” test for determining chargeable consideration which as drafted could result in a gifted exchange of properties both being charged at the higher valuation
• The effect on sale and leaseback relief
• A proposed alternative to the multiple dwelling transfer relief

As with most Finance Bills, there are likely to be several amendments prior to the Bill receiving Royal Assent later this summer. In the meantime, those undertaking substantial property transactions should take steps to ensure that they comply with current SDLT regulations. As tax mitigation specialists Newshams are able to give advice on SDLT, how it may affect any private or business transaction and how to put in place an effective mitigation strategy.

Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce the tax costs on your corporate transaction or e-mail us at enquiries@newshams.com and we’ll get straight back to you.

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16th May 2011

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