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Do cosmetic clinics have to pay VAT

Do Cosmetic Clinics have to Pay VAT?

10/11/2023Tax News and Tips , VAT

Are you a cosmetic clinic owner wondering whether you have to pay VAT on your services? Then this blog is for you. When you’re employed in a cosmetic clinic in the UK, staying informed about industry-specific regulations is essential. HMRC enforces distinct sets of rules tailored to each sector, and non-compliance can result in fines imposed by regulatory authorities. In the realm of VAT, unique regulations and guidelines are applicable to various industries, and cosmetic clinics are no exception to this rule. In this blog post, we aim to demystify VAT taxation’s intricacies within the clinic setting. To kick off, we’ll delve into a real-world scenario featuring Illuminate Skin Clinics, Ltd. This cosmetic clinic found itself in a legal dispute with HMRC due to VAT non-compliance, and the ramifications of their case bear notable significance for the industry at large. Subsequently, we’ll elaborate on the applicable VAT rate for those operating cosmetic clinics. Stay with us until the conclusion for comprehensive insights!   If you need a consultation on VAT, contact us!   FTT’s Recent Ruling for Cosmetic Clinics FTT has given a recent ruling in 2023 that has significant implications for the industry. The ruling was given in an appeal made by Illuminate Skin Clinics Ltd. Illuminate, a UK-based company specialising in cosmetic treatments encompassing aesthetics, skincare, and wellness, encountered a VAT-related predicament. The company initially registered for VAT in 2014 but later deregistered in 2017. However, their VAT troubles commenced in 2019 when HMRC declared that the company no longer qualified for VAT exemption. This determination arose following an inspection of the clinic by HMRC in 2019, leading to the conclusion that the VAT tax repayment claimed by the company for the tax years 2012–2016 was not applicable. HMRC’s stance was rooted in the belief that the services and products offered by Illuminate were not eligible for VAT exemption. In response, Illuminate opted to contest this decision, taking the matter to the First Tier Tribunal (FTT). Following a protracted four-year legal battle, the FTT delivered its verdict in 2023. The tribunal ruled that, as the services and products provided by Illuminate did not fall under the category of medical care, VAT would indeed be applicable. Let’s delve further into the implications of this decision.   What Exactly is Medical Care? The ruling hinged on the assessment that the company’s services did not align with the definition of medical care. In accordance with both the First Tier Tribunal (FTT) and UK legal criteria, medical care entails the diagnosis, treatment, or remedy of diseases or health disorders. Crucially, these services should be geared towards therapeutic objectives. Regrettably, the evidence presented by Illuminate to the FTT failed to substantiate this crucial criterion. According to the tribunal, the company could not establish that its services were inherently therapeutic in nature. As a result, the verdict went against Illuminate Skin Clinics Ltd.   How Does This Affect Your Business? The outcome of this case carries noteworthy consequences for the cosmetic sector, particularly cosmetic clinics. For those offering services like fat freezing, thread lifts, or chemical peels, VAT exemption is no longer applicable. Likewise, clinics providing services such as fillers, facials, and intravenous drips are not considered within the realm of medical care. Consequently, there is a need to reevaluate and readjust tax calculations. The question remains: how much VAT will now be owed?   How Much VAT Do You Have to Pay? Per the verdict issued by the First Tier Tribunal (FTT), cosmetic treatments are now subject to the standard VAT rate. Presently, in the ongoing fiscal year, HMRC has established the standard VAT rate at 20 percent. Consequently, if the nature of your services cannot be substantiated as falling under medical care, you will be obligated to remit the tax without any possibility of repayment. In order to remain proactive and align with evolving trends, it becomes imperative to reevaluate your tax calculations to ensure your clinic is in compliance with the VAT requirements.   Can We Help? At CruseBurke, we recognise the evolving landscape following the FTT’s recent decision. Consequently, we offer access to top-tier tax advisors and accountants in London. Our experienced cadre of accountants possesses an in-depth comprehension of the intricate UK tax framework, enabling you to steer clear of penalties. When you choose to collaborate with CruseBurke, you ensure that you remain consistently informed about the most current industry developments.   If you need help recalculating your taxes, visit CruseBurke!   A Brief Summary! Indeed, VAT is applicable to cosmetic treatments in the UK, given that these services do not meet the criteria for medical care. Illuminate’s case study serves as a testament to the requirement of VAT remittance in the absence of proof that your services possess therapeutic intent. If your offerings encompass treatments like fillers, thread lifting, or fat freezing, ensuring VAT compliance is imperative. For assistance with tax calculations, enlisting the support of a trustworthy accounting partner well-versed in UK regulations is a prudent course of action. They can navigate the complexities of UK law and assist you in meeting your tax obligations.   We at CruseBurke provide you with the best tax advisory and accounting services in London. Click here to get an instant quote!

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LP10 letter

What is an LP10 Letter and How to Get it?

30/10/2023Sole Trader

Are you looking for more information on the LP10 or the Lorimer letter? Read this blog till the end. The LP10 letter was introduced first in 1993 as a way to allow freelancers to be considered self-employed. It encompasses many benefits to the holder by reducing the tax. But what exactly is it, and how do you get one? Join us as we explore the intricacies of an LP10 letter. We will start by describing it clearly to the audience. Then, you will be given the eligibility criteria for an LP10 letter, followed by who can apply for it. Lastly, you will be given a short guide to help you apply for an LP10 letter.   If you need more information, visit CruseBurke!   What is an LP10 Letter? An LP10 letter is a document provided by the HMRC to a person’s employer. The letter states that you should be treated as a self-employed person and therefore not be taxed under the PAYE system. The letter ensures that a person who is self-employed is taxed appropriately instead of having to file a tax return at the end of each year. This letter is provided to only short-term employees who do not want to fall under the PAYE system.   What is the PAYE system? The pay-as-you-earn, or PAYE, system allows the employer to deduct taxes from the salary of their employee. In addition to this, employers can also deduct the National Insurance Contributions (NICs). This amount is deducted on behalf of HMRC and paid to the regulatory body.   So Why is There a Need for a Lorimer Letter? If you are a freelancer or a person who is self-employed, you probably file your taxes yourself. Therefore, when an employer deducts your salary for the tax and NIC on behalf of the HMRC, you are overpaying the tax. Not only are you paying your tax as a self-employed individual but also as an employee to the person who you work for on a short-term basis. Although you can apply for tax rebates, it can be frustrating as they are paid by the end of the tax year. That is why you need an LP10 letter.   Are You Eligible for an LP10 Letter? A Lerimor letter is provided to those individuals who are freelancers and work on short-term contracts. This is to ensure that they are not overpaying their taxes. In addition, to apply for the letter, you must also fulfil the following requirements: Be a self-employed sole trader You must have an NIC and a UTR number Evidence of multiple short-term employment contracts The work you are applying for must be for less than 10 days Proof that you are in control of your work   Who Can Apply for an LP10 Letter? Although the letter is mostly associated with the film and television industry, it is applicable to multiple sectors. This includes arts, literature, finance, education, healthcare, IT, and others. Here are some of the cases to help you clarify: If you are a writer hired to write a single article for a newspaper. If you are a plumber hired to make fixes in a client’s home. If you are a musician hired to play at a wedding.   How to Apply Yourself! If you are looking to apply for an LP10 letter, make sure that you are eligible. Although we have given the eligibility criteria above, it is recommended to study the rules thoroughly. To start the procedure, contact HMRC or visit their website. You will be required to show a 12-month employment history. Once you get the letter, it will be applicable for 3 years. After the end of the period, you will need to apply for it again.   If you are looking for a reliable accounting partner as a self-employed person, contact us!   A Quick Wrap-Up An LP10 letter is provided to those self-employed sole traders who work on short-term contracts. The letter is provided by the HMRC to the employer who employs a worker for less than 10 days. This letter asserts that you should not be charged under the PAYE system and provided with a gross salary if you are a worker. The letter ensures that freelancers who work on short-term contracts get their salary on time without any tax deductions as they file their taxes separately. This ensures a smooth tax system instead of applying for tax rebates at the end of the year.   We at CruseBurke understand that the UK’s tax structure is complicated and therefore provide you with the best tax advisory and accounting services in the UK. Click here to get an instant quote.

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Mortgage interest restriction

What is the Mortgage Interest Restriction in the UK?

27/10/2023Landlord

Are you a landlord wondering how the Mortgage Interest Restriction (MIR) affects your taxes? Read this blog till the end. MIR is a policy that was introduced by the UK government in 2017. It was gradually applied over the next 4 years to give the landlords time to adjust to the changes. It affects your taxes and income; therefore, you need to know about it. In this blog, we will cover a range of questions to give you a complete understanding of the topic. Firstly, we will look at what Mortgage Interest Restriction is and why the government imposed it. Then, we will see who is affected by this change, and if you are, how can you calculate your new tax? Let’s begin!   If you are looking for regular tax updates as a landlord, visit CruseBurke!   What is Mortgage Interest Restriction (MIR)? Mortgage Interest Restriction restricts the tax relief for financing costs on residential properties to the basic rate of income tax. It changed how much tax relief will be provided to you for various finance costs, which include: Mortgage Interest Interest on loans taken for furnishing Charges paid when taking out a loan or a mortgage This is what the MIR policy entails, but what was the reason for imposing it?   Why Did the Government Impose Mortgage Interest Restrictions? Prior to the fiscal year 2016–17, you could claim almost all of your mortgage interest against your rental income. This meant that there were some landlords who were at an advantage with a higher rental income. To make the system fairer, the government introduced the Mortgage Interest Restriction policy. They reduced your tax relief if you had a high income and were paying the income tax at a higher rate. The tax relief was gradually reduced over a period of four years. According to HMRC, the deductions from property income will be restricted to: 75% for 2017-18 50% for 2018-19 25% for 2019–20, 0% for 2020-21 and beyond Therefore, the individuals will only be able to claim a basic rate tax deduction of 20 percent. This reduction is from their Income Tax Liability on the portion of finance costs that are not deducted while calculating the profit.   Implications of Mortgage Interest Restriction on Different Sectors: The MIR impacts a lot of people in the economy, and therefore the economy itself. Following are some of the major implications of this policy:   1. Impact on the Economy The government expects that MIR could reduce the overall demand for housing, but only marginally. However, there is not a significant impact on the prices of houses or rents. This is because only a small portion of people are affected by the policy.   2. Impact on Landlords The government of the UK expects that only 20 percent of landlords will be affected by the introduction of MIR. The individuals who were getting a higher rate of tax relief will have to bear more costs to make the market fairer.   3. Impact on Equality The policy is targeted at promoting equality. Those with higher rental incomes will have to pay more. However, if you are in the protected characteristic group, you will not be affected. Now that you know why the government imposed the restriction, let’s see if you are affected by it.   Are You Affected by MIR? The Mortgage Interest restriction only affects those who are paying a higher tax rate of 40 percent on their income. Previously, you could reclaim 40 percent of your mortgage interest; now, that rate has been reduced to 20 percent. However, if you were a basic-rate taxpayer, you were already getting only 20 percent tax relief, and therefore, nothing changed for you.   How Can We Help? If you are a landlord who has multiple properties and you are paying a higher income tax, you need help. Therefore, we at CruseBurke provide you with the best accounting services in London. That’s not all; we ensure that you get the benefits that the government allows and plan your taxes ahead of time.   Click here to get an instant quote from our team at CruseBurke!   A Quick Summary! Mortgage Interest Restriction is a policy that reduces the tax relief that you can claim on finance costs. This also includes the fees paid on getting loans and mortgages as well as loans taken out for furnishing. The policy makes the market a bit fairer by disincentivising landlords with higher incomes. If you were getting 40 percent tax relief on mortgage interests, now you will only be eligible for 20 percent. Therefore, it is recommended that high-rate tax payers partner with a reliable accounting firm to avoid regulatory fines.   We at CruseBurke provide you with the best tax advisory and accounting services in the UK. Click here, and we will call you right back!

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pension annual allowance

Annual Pension Allowance: How It Works?

23/10/2023tax , Tax Issues , Taxation

The Annual Pension Allowance is one of the most confusing terms. People are generally not sure what it means, let alone its implications. But don’t worry, this blog will make everything crystal clear. In this blog, we will provide our readers with a clear definition of the Annual Pension Allowance. In addition, we will provide you with a detailed method for how you can start calculating it for yourself. In addition, you will also be provided with the details of the Tapered Annual Allowance and how it is different from the former. Then you will be provided with a method so you can calculate it for yourself. Le’s begin   Get the best tax advisory services with CruseBurke!   What is the Annual Pension Allowance and How it Works? Annual Pension Allowance is the limit up to which you can save for your pension without being taxed within one fiscal year. In other words, it is the total amount you can put into a pension in one year without having to pay any tax. For the current fiscal year, which is FY 23–24, the amount has been set at £60,000. This basically means that you can save up to the aforementioned amount between April 6 April 2023, to 5 April 2024, without having to pay any tax. However, if your amount exceeds this, you will have to pay tax on the additional savings.   But What Counts Towards the Annual Allowance? Your Annual Pension Allowance counts all of your private pensions, in case you have more than one. This also includes the total amount paid into a defined contribution scheme in a tax year by you or your employer. In addition, if there is an increase in a defined benefit scheme during the tax year, that will also contribute to your annual allowance. It is important to remember that there are two types of private pensions. The defined contribution and the defined benefit. The first is a pension pot, and it is based on how much you put into it. The second is a workplace pension, defined by your employer based on the salary and the years spent at the company.   Does the Annual Pension Allowance Remain the Same? However, you may not be surprised to learn that the allowance does not remain the same. Not only does it change every year, but how much you save depends on your income. Here are two circumstances under which your annual allowance can change: If you have a high-income If you have flexibly accessed your pension pot Now let’s discuss how much the allowance will be reduced under the above-mentioned circumstances.   What is a Tapered Annual Allowance? If you have a high income, this means that you have more money, and therefore, the government reduces your allowance. They know that you can pay the tax and might use the pension schemes for tax evasion. The reduced annual allowance, or tapered annual allowance, applies when your Threshold income is over £200,000 adjusted income is over £260,000   How to Calculate the Tapered Annual Pension Allowance? Calculating the reduced annual allowance will require you to know about the following within the tax year: Net income Pension savings Threshold income Adjusted income The allowance is reduced when your adjusted income is over £260,000, while your threshold income is also above £200,000. If the latter is below the mentioned amount, your allowance will not be reduced in any given circumstance, no matter how high your adjustment income is. Nevertheless, if your threshold income is above £200,000, your annual pension allowance will be reduced by £1 for every £2 of adjusted income over £260,000. While calculating the allowance for previous years, it is important to remember that the threshold income and adjusted income limits are different.   If you need tax advisory services in London, contact us!   A Quick Wrap-Up Let’s wrap up the discussion. Annual Pension Allowance is the total amount that you can save under private pension schemes within one tax year without having to pay tax. The allowance set by the UK government for the ongoing fiscal year is £60,000. This means that you can save up to this amount between April 2023 to 5 April 2024, without having to pay a penny to the government. However, the allowance is reduced if you earn more or get a flexibly accessed pension. If your threshold income is above £200,000 and your adjusted income is above £260,000, the allowance will be reduced. The government does this to ensure that you are rightly taxed for a higher income. If the above two conditions are fulfilled, your annual pension allowance will be reduced by £1 for every £2 your adjusted income goes over £260,000. Therefore, it is necessary to get your calculations right before filing your taxes.   We at CruseBurke provide you with the best accounting and tax advisory services in London. Click here to get an instant quote from our team!

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tax-advantaged share schemes

What are Tax-Advantaged Share Schemes in the UK?

20/10/2023tax , Tax Saving Tips , Taxation

Tax-advantaged share schemes have become popular for businesses in the UK. These schemes incentivize employees with tax benefits to purchase shares in the company. But there are multiple schemes, and if you want to implement one, read till the end. This blog will provide our readers with essential information on all tax-advantaged share schemes. We will first look at how they work and then give you information about each scheme. In addition, this blog provides all the information you may require for each tax-advantaged share scheme. In the end, you will be provided with the benefits of why you should consider opting for one of these schemes as a business owner.   If you are looking for a private consultation on these schemes, contact us!   How Tax-Advantaged Share Schemes Work? Generally speaking, these schemes allow the employees of a company to purchase company shares at discounted rates. In addition, they also provide tax incentives to the people who purchase these shares. This can include a lower Capital Gains Tax (CGT) on selling these bonds as well as an exemption from the income tax on dividend earnings. The aim is to have sufficient funding while providing a monetary incentive to the employees to work harder for the company.   4 Tax-Advantaged Share Schemes in the UK In the UK, there are four major tax-advantaged share schemes. Below, we have mentioned the eligibility criteria for each and what the employees get in compensation.   1. Enterprise Management Incentives (EMI) If your company is valued at £30 million or less in the UK, you may be eligible for the EMI. A tax-advantaged share scheme allows a company to grant shares up to the value of £250,000 over three years. However, you cannot apply for this if you are working in the banking, farming, property development, legal services, or shipbuilding industries. The benefits provided to employees who purchase company shares include exemption from Income Tax and National Insurance Contributions (NIC) for the market value at the time of purchase. However, if you are provided with these shares at a discounted rate, you will have to pay both, but only at the discounted rate. In addition, CGT also applies when you sell these shares.   2. Company Share Option Plan (CSOP) Unlike the first tax-advantaged share scheme, CSOP is provided to all firms, irrespective of how much they are worth. Under this scheme, you can provide shares of value up to £60,000 to your employees in the future at a fixed rate. For the employees who purchase the shares under this scheme, there are many benefits. This includes exemption from Income Tax or National Insurance Contributions (NIC) on the total difference between the amount paid and their actual worth. Capital Gains Tax will also apply when you sell these shares.   3. Share Incentive Plans (SIPs) The Share Incentive Plans (SIPs) scheme is more comprehensive and provides benefits for various different types of share options. If you get shares under SIPs and keep them in your plan for 5 years, you will not need to pay Income tax or NIC on their value. In addition, if they remain in your plan until you decide to sell them, you will also be exempted from CGT. There are four ways to give shares under SIPs. You can provide your employees with free shares worth £3,600 within one year. They can also be provided with partnership shares from their salary before tax deduction for up to £1,800, or 10%. Two matching shares can be given for partnership shares.   4. Save As You Earn (SAYE) The last tax-advantaged share scheme is Save As You Earn. This scheme is a bit different, as it uses your savings from each month to buy shares at the end of your share contract. You can save up to £500 a month under the scheme. This scheme provides numerous advantages, such as tax-free interest and a bonus at the end of the scheme. In addition, it exempts the shareholder from Income Tax as well as NIC. You may have to pay CGT to sell these shares. However, if you transfer the shares to an Individual Savings Account (ISA) or to a pension, then CGT is not applied.   Visit CruseBurke to learn more about the schemes and how you can implement them in your corporation.   A Quick Summary Tax-advantaged share schemes allow employees of a company to purchase shares of that company at discounted rates. In addition, the company shareholders are also given tax exemptions from Income tax, NIC, and CGT. There are four such schemes. EMI is only for firms valued under £30 million, whereas CSOP is for any firm operating in any industry. In addition, tax-advantaged share schemes include the SIPs and SAYE, which provide more through compensation and are widely preferred by companies in the UK.   If you need assistance with the implementation of these schemes in your firm, click here to get an instant quote.

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attendance allowance

What is Attendance Allowance and its Eligibility Criteria?

19/10/2023Pension

If you have a severe disability in the UK, you may be eligible for the attendance allowance. But what is the attendance allowance, and how can you be sure that you are eligible for it? That is exactly what we are here to answer. In this blog, we will provide you with all the information you need to apply for this state benefit. We will start by defining the allowance and why the UK government provides it to its citizens. Then, we will look at its eligibility criteria by discussing who can apply for it. Lastly, we will tell you how you can claim an attendance allowance and how much will be paid to you.   If you need more information about attendance allowance, visit CruseBurke!   What is the Attendance Allowance in the UK? Attendance allowance is provided by the Government of the UK to those who have a severe disability and require another person for assistance. In addition, this benefit does not depend on your income or savings. The scheme aims to help disabled people live independently with dignity. In addition, it also attempts to reduce the burden on family members. If you are wondering whether you should be applying for it, then the answer is yes, because it can substantially improve the quality of your life by providing this assistance.   Who can Apply for an Attendance Allowance? The above section provided us with a clear description of what the allowance is and why it is provided. Now, let’s see if you are eligible to apply for an attendance allowance. The following are the requirements that you must fulfil: A physical disability, which includes sensory disabilities Or a mental disability (a person can also have both) You are at the state pension age Required assistance for at least 6 months Be a resident of Great Britain Must have lived two of the last three years in the UK Not be subject to immigration control You are not getting DLA or the PIP   If you are having a problem understanding the complicated requirements, call us; we are always ready to help!   How Much Does the Government Pay for this Benefit? Sorry to keep you waiting for so long. Now we will see how much the government pays for the attendance allowance. The allowance is given to candidates at two rates. The lower rate and the higher rate;   The Lower Rate: For this rate, you must require frequent assistance performing the day-to-day tasks. In addition, the applicant must be supervised during the day and night by another person. If that is true for you, the government provides a total of £72.65 per week under this rate.   The Higher Rate: To be eligible for the higher rate, you must meet the requirements of the lower rate. In addition, you must also have a medical report from a recognised doctor that claims you have less than 12 months to live. If that applies to you, the government will provide you with a total of £108.55 per week. Also, keep in mind that the rates can be changed depending on the circumstances. You must report the change in circumstances to the government if you are taking the attendance allowance. The beneficiaries of this allowance are also provided extra pension credits, housing benefits, and council tax reductions.   How Can You Apply for an Attendance Allowance? If you believe that you are eligible for an attendance allowance, then let’s get to the application procedure. There are two ways you can get an application form: Printing it from the government website Calling a relevant helpline to claim a form The form comes with detailed notes on how to fill it out. If you are unable to perform the task yourself, seek assistance. It is to be noted that once the form is filled out, it should be sent to the following address: “Freepost DWP Attendance Allowance” The point to be noted here is that you do not require a postcode or a stamp while submitting the form.   When Will You Get the Payment? The attendance allowance cannot be backdated. This basically means that you will only be paid starting from the period when you file a claim. If you have posted the form to the above-mentioned address, then the time period starts when the application is received by DWP. But if you have placed a call on the helpline, that will be counted as your starting point. It is important to mention that for those who have less than 12 months to live, their applications are dealt with on a priority basis. And in case your application is rejected by the authorities, you can also ask for a mandatory reconsideration.   At CruseBurke, we understand that it can be tiring to understand all the complexities. Reach out to us, and we’ll arrange a meeting to answer all of your questions.   A Quick Summary Attendance Allowance is provided to disabled people who are at the state pension age and living in the UK. The support aims to improve the quality of life so that the applicant can enjoy an independent life. The payments are made at two rates, for which we recommend studying the eligibility criteria in detail.   At CruseBurke, we sympathise with all disabled people. Therefore, we are always a call away. Get in touch with us today!

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claim guardian allowance

How to Claim Guardian Allowance in the UK?

10/10/2023Dividend Allowance , Finance , Taxation

If you are raising a child whose parents have passed away, then you can claim a guardian allowance. The UK government understands that bringing up a child is expensive. So to ensure they get the right upbringing after their parents pass away, they provide their guardians with an allowance. You can claim a guardian allowance in addition to the child benefit, and it’s completely tax-free. In this blog, we will look at guardian allowance in detail and tell you why you should be claiming it. We will also provide you with the eligibility criteria set by the UK government. Lastly, you will be given a step-by-step guide so you can easily claim a guardian allowance. Read till the end so you don’t miss anything.   If you require personal financial advice, contact us!   What is Guardian Allowance? Guardian allowance is a state benefit provided to legal guardians who are looking after a child under the age of 16. The payments are paid to the guardian on a weekly basis. The current guardian allowance rate in the UK is £20.40 per week, and it’s not taxed under your personal income. In addition, you can claim this on top of the child benefit. However, this policy varies from region to region, so if you are living in Wales, this may not apply.   Why Should You Claim Guardian Allowance? The guardian allowance is accounted for weekly and paid every 4 weeks. However, it can be every week if you are a single parent. The money is easily transferred to any bank account, excluding a Nationwide Building Society account in someone else’s name. In addition, there are some more reasons why you should claim a guardian allowance: Reduce the overall costs of raising a child. Improve your financial situation to increase your income. Become eligible for other benefits, such as free school meals. Ensure that the child is brought up and becomes a valuable member of society. Reduce the financial pressure by having a consistent income. Now that we know what guardian allowance is and why you, as a guardian, should apply for it, let’s look at the eligibility criteria.   Are You Eligible? Guardian allowance, as the name suggests,  is only provided to legal guardians who are bringing up someone else’s child. In addition, the UK government categorises the requirements into two distinct methods. The first case is when both parents have passed away, and the other is when there is a surviving parent.   When Both Parents Have Passed Away: The following are the requirements in case both of the child’s parents have passed away: You are taking care of their child The child’s parents are dead You must have already qualified for child benefit One of the deceased parents must have been born in UK, EEA or Switzerland The parent must have lived in the UK for 52 weeks in a 2-year period since the age of 16   When There is a Surviving Parent: However, the condition changes if there is a surviving parent of the child and you are the guardian: You have no information about the whereabouts of the surviving parent The parents were divorced or separated, and there is no legal obligation on the surviving parent. The parents were unmarried and the mother died with the father unknown The surviving parent is serving a sentence of at least 2 years at the time of the partner’s death The surviving parent is hospitalised by court order   We at CruseBurke can help you apply for a guardian allowance. Get in touch now!   How to Claim Guardian Allowance in 5 Steps Now let’s see how you can apply for and claim guardian allowance in 5 easy steps. These steps should be followed thoroughly, and if you have any questions, you should contact an expert. Let’s begin:   1. Check Your Eligbility Before you start the process, it’s always better to see whether you qualify for the allowance. The eligibility criteria have been mentioned above in detail. Read it thoroughly to ensure that you fulfil all the requirements of a legal guardian before moving on to the next step.   2. Ensure You Have All the Documents Next, it’s time to check what documents you will need while applying. You will need to carry out the research and may also have to contact the guardian’s allowance unit. Ensure that you have all the documents before you move on to the next step.   3. Complete a Claim Form Now, it’s time to fill out a claim form. Make sure that you are using the information and details from verified documents, such as the government-issued ID. Do not misspell anything or write an inaccurate date.   4. Submit the Form Now it’s time to submit your form. You can submit the form to the nearest guardian’s allowance unit. In addition, you can post it to the address mentioned on the firm. Remember that you will receive a confirmation letter once the claim is received by the authority.   5. Prepare for an Interview This is not a necessary step, as the UK government does not carry out interviews for every application. Interviews are only done on a case-by-case basis. So if you feel that you will be doing an interview, start preparing for it.   If you are concerned about your claim, click here for an expert consultation session.   A Quick Summary Guardian allowance is a weekly allowance paid over 4 weeks by the UK government. To be eligible, you must be taking care of someone else’s child. In addition, there are many other specific requirements that you must also fulfil. Before starting the claim process, ensure that you are eligible and gather the required documents. Then you can fill out a form and post it to the address mentioned. But the form can also be submitted to a local representative. Lastly, get an expert opinion if you feel that your case might be weak.   …

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state benefits applicable to taxes

Are All State Benefits Applicable to Taxes?

03/10/2023Pension , tax , Tax Issues , Taxation

The UK government provides countless benefits to its citizens, from state pensions to child support. But are all state benefits applicable to taxes? Join us as we explore the state benefits provided by the UK government in detail. Firstly, we will look at some of the tax-free state benefits for which you do not pay taxes. Then we will mention other state benefits for which you have to pay additional taxes. Let’s get to it!   If you are looking for an accounting agency in London, contact us!   Tax-Free State Benefits You will be surprised to learn that most state benefits are not taxed by the government. There are countless benefits that you can receive without paying a single penny in tax. Following are some of the state benefits that are not subject to taxes:   1. Attendance Allowance People living in the UK who are over the state pension age and have a physical or mental disability are provided with an attendance allowance. This allowance is not taxed by the UK government and can be claimed in addition to the Personal Independence Payment (PIP) or Disability Living Payment.   2. Bereavement Support Payment If you have a child and you have lost a spouse after April 6, 2017, you are provided with bereavement support payments (BSP). This allowance is not taxed and provides you with the initial payment of £3,500, followed by 18 monthly payments of £350.   3. Child Benefit Child benefit is another payment that the UK government provides to its citizens for children under the age of 16. For the first child, you are given £24.00 per week, whereas for the subsequent children, you are given £15.90 per week. This support is also tax-free.   4. Disability Living Allowance If you are under 16 and disabled, you are provided with a disability living allowance (DLA). This allowance has two components: a care component and a mobility component. The UK government does not charge you any tax for this allowance, but you must be living in the UK.   5. Guardian’s Allowance If you are raising a child whose parents have passed away, you will be given a guardian’s allowance. You will receive a total of £20.40 per week for each child. The payments received are not subject to taxes.   Other Tax-Free State Benefits In addition, the following state benefits are also not taxed: Child tax credit Free TV licence for people over 75 Housing benefits Income support if you are not involved in a strike Industrial injuries benefit, etc.   To navigate state benefits, you might need professional support. visit CruseBurke!   State Benefits Applicable to Taxes Nevertheless, there are state benefits for which you have to pay tax. You must ensure that if you are benefiting from any of these allowances, you file your taxes accurately. Following are some of the major benefits subject to tax:   1. Carer’s Allowance If you are receiving an allowance from the government for taking care of an elderly person or a disabled person, it will be subject to income tax. The allowance improves the financial security of carers while compensating for the costs associated with basic needs.   2. Employment and Support Allowance (ESA) Among the state benefits applicable to taxes is the employment and support allowance (ESA). This is paid to people who are unable to work due to a chronic illness or a disability. However, to be eligible for it, you must have paid national insurance contributions in the past.   3. Widowed Parent’s Allowance (WPA) The widowed parent’s allowance (WPA) is provided to those parents who have lost a child under the age of 18. To be eligible for this allowance, the deceased must have lived with their parents. The payments received from the allowance are subject to income tax.   4. Jobseeker’s Allowance (JSA) If you have paid a certain amount of national insurance contributions and are looking for a job, you will be provided with JSA. This amount will also be taxed by the UK government as income tax.   5. The State Pension The elderly citizens of the UK who have participated in the national insurance coverage for 10 years are provided with pensions. These pensions are provided to people until the age of 66 and are taxed by the UK government.   Other State Benefits Applicable to Taxes There are several other benefits that are also taxed by the government. These include: Bereavement allowance Incapacity benefit Industrial death benefit scheme   Summing it Up! Are all state benefits applicable to taxes? No, but you have to navigate the tax structure to learn more. There are countless schemes for which the government applies an income tax, such as carer’s allowance, ESA, WPA, and JSA. On the contrary, benefits such as child benefits, attendance allowance, and guardian’s allowance are not taxed. However, it can be difficult to understand if you are paying the tax to avoid regulatory fines. Therefore, we recommend getting professional help from tax advisors for advanced tax planning and filing.   Arrange a virtual meeting with CruseBurke to learn whether you are paying the right amount of taxes. We will provide you with the best tax advisory services in the UK.

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mini budget 2022

A Simple Guide to the Mini-Budget 2022 (The Growth Plan)

06/10/2022Finance

The Headline Message From The Chancellor The Growth Plan 2022 makes growth the government’s central economic mission, setting a target of reaching a 2.5% trend rate. Sustainable growth will lead to higher wages, greater opportunities and provide sustainable funding for public services. The United Kingdom currently faces a period of high inflation. The government has already taken significant steps to address high energy bills, the biggest challenge, by announcing the Energy Price Guarantee. To drive higher growth, the government will help expand the supply side of the economy. The Growth Plan sets out action to unlock private investment across the whole of the UK, cut red tape to make it quicker to deliver the UK’s critical infrastructure, make work pay, and support people to get onto the property ladder. Taken together, reforming the supply side of the economy, cutting and simplifying tax, and maintaining fiscal discipline will drive efficiency, enhance UK competitiveness, and help to boost growth sustainably in the long term. Some of the measures announced by the Chancellor were as follows.   Rates and Allowances 2022/23 2021/22 Income tax rates – England and Wales (non-dividend income) 0% lower rate tax – savings rate only Up to £5,000 Up to £5,000 20% basic rate tax £12,571 to £50,270 £12,571 to £50,270 40% higher rate tax £50,271 to £150,000 £50,271 to £150,000 45% additional rate tax Above £150,000 Above £150,000 Scottish income tax rates (non-dividend income) 19% starting rate tax £12,571 to £14,732 £12,571 to £14,667 20% basic rate tax £14,733 to £25,688 £14,668 to £25,296 21% intermediate rate tax £25,688 to £43,662 £25,297 to £43,662 41% higher rate tax £43,663 to £150,000 £43,663 to £150,000 46% top rate Above £150,000 Above £150,000 Personal allowance Personal allowance £12,570 £12,570 The government will reduce the basic rate of income tax to 19% for England and Wales from April 2023. Also, the additional rate of income tax of 45% is abolished from April 2023, meaning the highest rate of income tax for individuals will be 40%. The announcements to income tax do not automatically affect rates in Scotland. The Scottish Government, which has responsibility for setting bands and rates of income tax in Scotland, will set out its plans for income tax (and other devolved taxes, including the property tax Land & Buildings Transactions Tax) in its draft budget, expected to be published in early December and finalised in February.   Income Tax The basic rate of income tax will be cut to 19% from April 2023, 12 months earlier than planned. This will apply to non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland, the savings basic rate which applies to savings income for taxpayers across the UK and the default basic rate which applies to non-savings and non-dividend income of any taxpayer that is not subject to either the main rates or the Scottish rates of income tax. A four-year transition period for Gift Aid relief will apply, to maintain the income tax basic rate relief at 20% until April 2027. There will also be one-year transitional period for Relief at Source (RAS) pension schemes to permit them to continue to claim tax relief at 20%. The additional rate of income tax will also be removed from April 2023. This will apply to the additional rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland. The additional rate for savings, dividends and the default rates will also be removed from April 2023, and this change will apply UK-wide. As the additional rate of income tax will be removed current additional rate taxpayers will also benefit from the Personal Savings Allowance of £500 for higher rate taxpayers.   National Insurance As previously announced, from April 2022 the rate of National Insurance contributions across all classes (except Class 2 and 3) was increased by 1.25%. The increase in National Insurance contributions for the period 6 April 2022 to 5 November 2022 will apply to: Class 1 (paid by employees) Class 4 (paid by self-employed) Secondary Class 1, 1A and 1B (paid by employers). Employers will only pay on earnings above the secondary threshold. However, as announced on 23 September 2022, these rates are reverted to historical rates with effect from 6 November 2022. Furthermore, the new Health and Social Care Levy, which was due to take effect from 6 April 2023 is now scrapped. There are no changes to the Primary Threshold and Lower Profits Limit which were increased from £9,880 to £12,570 in April 2022. These are aligned with the personal allowance threshold. NI Category 2022-23 2021-22 Employee’s primary class 1 rate between primary threshold and upper earnings limit (up to 5 November 2022) From 6 November 2022 13.25% 12% 12% Employee’s primary class 1 rate above upper earnings limit From 6 November 2022 3.25% 2% 2% Employer’s secondary class 1 rate above secondary threshold From 6 November 2022 15.05% 13.80% 13.80% Class 4 rate between lower profits limit and upper profits limit From 6 November 2022 10.25% 9% 9% Class 4 rate above upper profits limit From 6 November 2022 3.25% 2% 2% National insurance 2022/23 2021/22 Lower earnings limit, primary class 1 (per week) £123 £120 Upper earnings limit, primary class 1 (per week) £967 £967 Apprentice upper secondary threshold (AUST) for under 21s/25s £967 £967 Primary threshold (per week) £190 up to 5 July 2022; £242 from 6 July 2022 onwards (see below) £184 Secondary threshold (per week) £175 £170 Class 2 small profits threshold (per year) £6,725 £6,515 Class 4 lower profits limit £11,908 £9,568 Class 4 upper profits limit £50,270 £50,270 The annual National Insurance Primary Threshold and Lower Profits Limit, for employees and the self-employed respectively, was increased from £9,880 to £12,570 from July 2022. From April 2022, self-employed individuals with profits between the Small Profits Threshold and Lower Profits Limit will not pay Class 2 NICs. Over the year as a whole for 2022-23, the Lower Profits Limit, the threshold below which self-employed people do not pay National Insurance, is equivalent …

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closing a limited company

Closing a Limited Company: A Simple Guide

26/01/2022Business , Limited Company

Depending on your circumstances, closing a limited company can sometimes be an easy process but sometimes it can turn out to be a gruelling task that needs expert assistance. Whether you want to liquidate/dissolve a company, or you want it to strike off, you need to understand what is the best route to close a company. For this reason, we have come up with the different options that you can use to close a company. We’d break down the options available for the closing of a company based on whether a company is solvent or insolvent. Before we delve deep into the topic, let’s kick off with what is solvent or what is insolvent?   CruseBurke offers inclusive accounting, taxation, payroll, company formation and liquidation services at the best price. Check out our company formation packages and our accounting services for small businesses. Contact us right now!   Solvent or Insolvent: What’s the Difference? A solvent company can pay its bills and liabilities and has no threats of legal actions from creditors. Whereas, an insolvent company can’t pay its liabilities and debts. Insolvent company has insufficient funds and its liabilities are worth more than its total assets.   Closing a Limited Company (Solvent) There are two ways to close a solvent company, you can either:     Start a members’ voluntary liquidation Apply to get the company struck off the Register of Companies Let’s talk about member Voluntarily Liquidation:   Members’ Voluntary Liquidation For most directors, members’ voluntarily liquidation is a tax-efficient way to liquidate a company. Shareholders get the value of their shares instead of being charged with capital gains or income tax. To strike off the company from the company register, you need to voluntarily liquidate your company if one of the following things applies: You want to retire You don’t wish to run the business You want to quit or retire from the family business and there’s no one to run it To qualify for members’ voluntary liquidation, you must: Prepare a Declaration of solvency’ (English and Welsh companies) Ask the Accountant in Bankruptcy for form 4.25 (Scot) – Scottish companies You’ll be required to review the assets and liabilities of the company before making the declaration.   Strike off the Limited Company From Companies Register Striking off a company is the cheapest and easiest way to close a solvent company. You can strike off a company through the company register, only if it needs to meet the following conditions: Its name remains the same for the last 3 months Isn’t threatened with liquidation Has no agreements with creditors Hasn’t been involved in trading activity or sold off any stock in the last 3 months   Get help from our insolvency practitioner. Check out our company formation packages and our accounting services for small businesses.  Contact us right now!   Closing an Insolvent Limited Company An insolvent company can arrange a liquidation if it is unable to pay its creditors. It can also go into compulsory liquidation. In simple words, if the liabilities of a company exceed its total assets it can be called insolvent. There are three ways to determine if a company is insolvent: The balance sheet test – Are the company’s assets more than its liabilities? The cash flow test- Is your company in a situation to pay its bills? The legal action test- Is there any legal action taken out against your company in access of £750?   Arrange Liquidation with your Creditors To liquidate an insolvent company, a director can inform that a company has stopped trading and be liquidated if: The company cannot pay its liabilities Enough shareholders agree   Get Shareholders’ Agreement You must call a meeting of shareholders and ask them to vote. Remember that 75% (by the value of shares) of shareholders must agree to the winding-up to pass a ‘winding-up resolution. You need to follow these three steps after the resolution: An authorised insolvency practitioner must be appointed as a liquidator to manage the insolvency process. The resolution needs to be published in Gazette within 14 days. Send the resolution to Companies House within 15 days   How Much Time does it take to Dissolve a Company? Generally, three months are taken to dissolve a company after it has been published in the Gazette. However, it may vary considerably depending upon the complexity of the process.   Responsibilities When Closing a Company Closing a limited company is not a straightforward process, there are a lot of responsibilities to meet along with the following:   VAT Deregistration When closing a company, you need to deregister your company from VAT by completing a VAT form 7 (if it is VAT registered) and informing HMRC about it.   Corporation Tax You need to inform HMRC that you are closing the company, otherwise, you may receive reminders to pay corporation tax by HMRC.   Capital Gains Tax When closing the company, you may sell or transfer the company’s assets to yourself at the market value. So you need to pay the capital gains tax liability levied on you at the time of closing your company on your self-assessment tax return.   How CruseBurke Can Help? If you have decided to end the company, closing a limited company can be the best route to take with our company liquidation services. Getting the help of our limited company accountants can help you relieve the stress involved with setting up or closing a company.   Save your time, money, and stress by turning to CruseBurke for setting up or closing a company. We have a team of skilled Limited Company accountants to do everything for you from scratch, we will deal with HMRC and Companies House on your behalf. Contact us right away!   Get an instant quote for a customised offer at a fixed fee!   Disclaimer: This blog is written for general information on the topic.

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