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06 December 2012

Cash basis available to small businesses from April 2013

on Thursday, 06 December 2012.

The Chancellor confirmed that the proposed cash basis for calculating taxable profits will be available to small unincorporated businesses from April 2013. This will allow sole traders and partnerships with turnovers below £77,000 pa to account for tax based on the income received and expenses paid in the tax year, rather than the amounts invoiced in the year.

06 December 2012

Capital gains tax exemption for ‘employee shareholders’

on Thursday, 06 December 2012.

This follows the recent news that the Government is introducing a new category of employees who will give up certain employee rights in exchange for at least £2,000 of shares in the company. New legislation will be introduced to exempt gains made on the sale of these shares in certain circumstances. We’ll update you further about this matter in January’s Tax Bulletin.

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.
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