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KRW Tax news

06 December 2012

Annual allowance for pensions reduced to £40,000 from April 2014

on Thursday, 06 December 2012.

As predicted in the press, a reduction in the current £50,000 annual allowance is coming, but not until April 2014. After this date it will only be possible to obtain tax relief on pension contributions of up to £40,000 per annum. The lifetime allowance will also be reduced to £1.25 million from April 2014 but with measures being introduced to protect taxpayers from any retrospective tax charges.

30 October 2012

The high income child benefit charge is coming in January 2013

on Tuesday, 30 October 2012.

From 7 January 2013 those earning over £50,000 will face a tax charge which effectively claws back all or part of any Child Benefit they receive.

The High Income Child Benefit Charge (HICBC) is being introduced to remove Child Benefit where an individual (a single parent or either partner in a couple) earns over £50,000. It will work by imposing a new tax charge on a high earner that is equal to all or part of the Child Benefit they have received.

27 September 2012

PAYE real time information is coming: are you ready?

on Thursday, 27 September 2012.

The current Pay As You Earn (PAYE) system has been around since the 1940’s and will be replaced by Real Time Information (RTI) in 2013.

With the current PAYE system HM Revenue & Customs don’t get to find out how much each employee has earned until the end of the tax year, when the employer submits form P35 ‘Employers End of Year Return’. This makes it difficult for HMRC to keep tabs on how much PAYE each employer owes each month, and often means that tax codes are based on out-of-date information.

However, this is all set to change with RTI which will involve employers sending HMRC an electronic report each time their employees are paid (i.e., weekly or monthly). These reports will be called ‘Full Payment Submissions’ and will contain the same information as form P35 but on a more regular basis.

25 July 2012

HMRC unveil plans to force businesses to operate PAYE on freelancers

on Wednesday, 25 July 2012.

HMRC came under fire recently when it disclosed that over 20,000 of its workers supplied their services through limited companies, and therefore avoided PAYE/NIC.

In this month’s Tax News we set out proposed legislation that will force many businesses to account for PAYE on fees paid to senior workers who provide their services via limited companies.

27 June 2012

Abolition of ESC C16 restricts capital treatment in DIY company wind-ups

on Wednesday, 27 June 2012.

Where a company is closed down without using a liquidator it used to be possible to get capital treatment on distributions to shareholders using Extra Statutory Concession C16.

In this month’s Tax News we set out the new rules which only allow capital treatment (and Entrepreneurs Relief!) where reserves distributed in a DIY winding-up are no more than £25k.
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