The latest news on any HMRC, Budget issues that may affect you.
We will keep you up to date with recent developments, so whether you are a landlord, higher rate taxpayer, sole trader or just want to know what is going on in the world of tax you will find it here.
Submission Deadline for 2011 Tax Return
With the deadline for submission of 2011 Tax Returns soon approaching, we thought it would be helpful to advise of the potential issues you may come up against if you do not submit your Return on time
What happens if I do not file my Return on time?
Contractors Cannot Escape the Online Only VAT Man
Since April of this year, all VAT-registered contractor businesses with a turnover of £100,000, along with all new registrants of the tax, have been required to file VAT returns and make VAT payments online.
Small Pensions Relief up to £2,000
Draft legislation from HM Revenue & Customs is being welcomed by retirement advisors for extending the relief on cashing in small pensions valued up to £2,000 to personal pension schemes. Joined by low-income support groups and the insurance industry, the advisors had been seeking HMRC to extend the relief since early last year.
HMRC Threaten Doctors and Dentists Who Don't Come Forward
Doctors, dentists and other medical contractors are advised to seek the advice of a specialist accountancy service as HM Revenue & Customs (HMRC) look to crack down on tax compliance in the medical profession. HMRC is set to issue letters to around 2,500 medical professionals, in the latest stage of its Tax Health Plan (THP) to stamp out evasion.
Recipients will be urged to get up to date and inform HMRC of earnings that have not been levied. A 21-day deadline will be imposed, after which time individuals may be heavily penalised or even face the same level of criminal prosecution that has so far resulted in nine arrests since the tax safe plan for plumbers ended in the summer.
US Citizens in the UK - IRS Amensty
All citizens of the United States of America and Green Card holders who are residing in the UK are required to complete a tax return each year and submit it to the United States Internal Revenue Service (IRS). The penalties for failing to file a tax return is simply astronomical, those who know about the recent changes to the penalties HMRC are to impose will be astounded by what the IRS charge and in comparison the UK penalties are little more than chicken feed. Budget 2011- 2012 Allowances
The increase in personal allowances to £8,105 from April 2012 is very welcome and is big step in taking personal allowances to £10,000 which is what the government is working towards.
As with all Budgets what is given with one hand is taken with the other and this year is no exception, as allowances increase the basic rate tax band has decreased from £37,400 for 2010/11 to just £35,000 for 2011/12. In addition to this there has been a 1% increase in National Insurance. The increase in National Insurance has been mitigated by the increase in of the threshold at which you start to pay National Insurance up from £5720 to £7225 from April 2011 although this only applies to those earning £20,000 a year or less, for those earning over £20,000 the NI increase will pinch.
2011 Budget News
Personal Allowances will increase to £8,105 from April 2012 giving cash increase in people's pockets of £126.
The merging of tax and National Insurance is to be put for consultation, if this happens it will be a long way down the road and a full merger of the two is seen as unlikely.
Pensioners are not expected to face any increase in taxes.
The 50 pence tax rate is a temporary measure, HMRC will review this to see how effective it has been. However, income tax was also a temporary measure when it was introduced to fund the Napoleonic Wars!
HMRC Tax Code Fiasco
It has been widely reported over the last year on the number of incorrect tax codes issued by HMRC.
Some 4 million tax payers are believed to have overpaid tax as a result of incorrect code notices being issued. That may be good news for those who are due tax refunds, however, it doesn't end there. A reported 1.4 Million tax payers have underpaid tax of £1,500 on average.
For those who have underpaid amounts of tax of less than £2,000 HMRC will make adjustments to their tax codes next tax year to collect the money. Should someone owe more than £2,000 the facility to have the amount collected via your tax code is not available, HMRC have advised that those affected will be given time to pay.
HMRC and Criminal Cases
HMRC managed to secure 157 criminal convictions up to 30 September 2009 some 62 fewer than for the period to September 2008.
Why is this? It seems HMRC are worried about taking cases to criminal prosecution because of the risk of losing in front of a Jury.
VAT Increase No Affect Electrical Goods
This is the claim from DSG chief John Browett who is not concerned by the impending VAT hike. Browett, who heads up Currys and PC World, said the effect of price deflation on technology products would offset the increase in VAT due to come in January 2011.