Personal Tax Archives - Page 2 of 3

News,May 2018

All about Gifts and Exemptions from Inheritance Tax!

George25/11/2021Accounting , Finance , Personal Tax , Taxation

It sounds like a great idea to gift your friends and family when you can enjoy the benefit of reduced estate value for inheritance tax purposes. This will immediately be advantageous for your own people as well. However, the potentially exempt transfer is a critical area and most people need professional help in order to ensure that they are avoiding any mistakes that might cause problems or loss in the future. This is important to know that a non-cash gift like the property share can make you or the recipient pay the capital gain tax if you do it while you are still alive. Choosing the right adviser with professional help can help you and the recipient make the most out of the opportunity. Before we delve further into the discussion, let’s have a look at the focused points of discussion in today’s article: Explanation of Potentially Exempt Transfer Civil Partner, Spouse, Family and Charity – How much can I Give? The Bottom Line Explanation of Potentially Exempt Transfer (PET): PET is the abbreviation of potentially exempt transfer and primarily this allows a person to make a gift of unlimited worth that can later be exempted from the inheritance tax. The condition here is that the person tends to live for seven years after this. In case the person does not live for the required time period, PET will be considered chargeable. This will result in adding the worth of the inheritance tax. Moreover, there are certain conditions that needed to be met for a lifetime potentially exempt transfer. Such transfers are normally considered as a gift from one person to another person or to a trust. The important point to notice here is that the gift can’t be given to a company or a corporation. Stuck with your accounts and looking for a helping hand? How about you get our guys on a quick call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. Civil Partner, Spouse, Family and Charity – How Much Can I Give? It allows civil partners and married couples that they pass their estate to their partner or spouse tax-free after the demise. In simple words, we can consider this fact as that the living spouse or partner can have the tax-free benefits of the whole estate without worrying about the inheritance tax IHT. Moreover, the unused tax-free allowance can also be transferred to the surviving spouse or partner. For instance, if a husband dies and the wife has the right to enjoy the entire estate, she can now add her husband’s tax-free allowance to her allowance as well. In the case of the unmarried partner, there is a slight difference which means that they have to pay the inheritance tax. Making gifts to family and children: This will depend totally on you, however, it is important to plan correctly. As mentioned above the family members and children will not be accountable for paying inheritance tax if you survive after seven years of making the gift. Make sure you make a record of the following if you intend to give money or gifts to your friends and family: The worth of the gift The time when you make the gift The person you plan to give the gift A clear defined explanation of the gift or asset. Coffee, cookies and taxes. What a perfect match. Get in the car, and reach our Croydon office today. Call us on 020 8686 8876 or email us to book your initial free one-hour basic consultation to discuss your requirements. We’ll make sure that we get all your documents submitted on time. Talk to our guys today! Charity in Will: In case you decide to leave your money or physical asset for a charitable body, you can do it either in your lifetime or through your will. This will be exempt from inheritance tax. This will also help to reduce the IHT rate but if the condition of 10% of the net estate is met. This complex point will require professional help to make a qualifying gift. The Bottom Line: Now that you have developed a better understanding of potentially exempt transfer, we can sum up the discussion by saying that it is suggested that the decision of making a gift should be considered with professional help due to the complexity of this area. This will help to ensure that the gift will qualify and you can benefit the most out of it. Can’t find what you are looking for? why not speak to one of our expert’s accountants in London and see how we can help you are looking for. Disclaimer: This article intends to provide general information based on potentially exempt transfers and relevant details.

What is Value Added Tax (VAT) and How Does VAT Work?

George05/11/2021Personal Tax , Taxation , VAT

VAT can be complicated, especially for the one who has just started out. Newcomers face a lot of difficulties to understand financial technicalities and jargon. Among those complex terms, the VAT is the one. Many business owners come across this term a lot while purchasing goods and services as private individuals from businesses. But only some of them are familiar with what actually is VAT, how does VAT work and how to charge and claim VAT. Let’s find out all in this short blog. Want to register for VAT? Fill out this form and leave the rest to us! What is Value Added Tax (VAT)? It is a general consumption tax that consumers need to pay for almost all goods and services in the UK. In simple words, it is an additional amount on most purchases for consumers. Any business operating within the UK with an annual turnover over the VAT threshold (£85,000 in 2021/22) is required to register for VAT and need to submit a VAT return. However, businesses below this threshold can voluntarily register for it. This is an indirect tax collected by the businesses on the government’s behalf. As they add VAT on all their goods and services, then they send the VAT paid to HMRC. They charge this tax on the items and services they sell to their customers and pay VAT on goods and services they buy from other businesses. All VAT-registered businesses need to keep records of the VAT charged and paid to others. How Does VAT Work? VAT is levied on most of the goods and services. Businesses that are VAT registered save a lot of money by charging VAT on the goods and services they sell and pay VAT on the things and services they use. Instead of sending VAT charged on every single transaction, businesses submit a VAT return to HMRC showing the total VAT they collected and paid in a tax quarter or year (as per the scheme). The VAT paid by a business to its suppliers is known as input tax and the VAT collected from other businesses is known as output tax. The amount of money you need to pay to HMRC will depend upon the difference of VAT you paid and charged. In case, if you collected more VAT from your customers than the VAT you paid, you need to pay the surplus to HMRC. On the other side, if you pay more VAT to your suppliers than you receive from your customers, you can request HMRC to reclaim the additional amount. Need help a VAT Accountant to Reclaim VAT, Contact CruseBurke! Current VAT Rates You need to be aware of the current VAT rates you pay and collect to reclaim the VAT on products you buy for your business. There are currently three VAT rates depending on the goods and supplies you deal with. These are: Standard VAT Rate (20%) A standard VAT rate of 20% is applied on most goods and services that fall under the category of luxury items like ice cream and sweets etc. Note: Due to Covid, you need to pay temporarily reduce the rate of VAT on supplies relating to hospitality, accommodation, or admission to certain attractions (Currently it is 12.5% from 1 October 2021 to 31 March 2022). For more details click here. Getting professional advice from a VAT accountant is preferable to get your VAT refunds and to be saved from hefty tax implications that can wipe out your profit. So get in touch with our experts to be on the safe side. Reduced Rate VAT (5%) This rate applies to some specific goods. It is charged at the rate of 5% on goods like domestic fuel and power, etc. Zero Rated VAT (0%) Goods that are considered essential are charged a 0% VAT rate. It includes: Basic Food items Newspaper Books and newspapers Clothes of children The goods supplied to non-EU counties and VAT-registered EU businesses would also be charged a zero-rated VAT. You need to keep records of it and report them on your VAT return. Exempt Items There are some goods and services that are totally exempt from VAT like: training and education insurance, medical, finance, credit selling, leasing and letting of commercial land or buildings subscriptions fees to membership organisations fundraising events ( managed by charitable organisations) How We can Help? So you are now well aware of what is VAT and how does VAT work. Remember that this blog just serves as a basic guide for you. We have not discussed the complex VAT issues here. Our team of VAT experts are there for your assistance with anything complicated. From VAT registration, submission of VAT returns, consultation to complex issues like assessments, cross borders transactions, our VAT experts will help you with everything. For further queries on VAT, reach out to our accountants for expert advice. Get in touch today! Disclaimer: This blog provides general information on how does vat work.

A Guide Based on How to Claim Overpaid Tax from HMRC?

George06/10/2021Payroll & PAYE , Personal Tax , Tax Issues

If you are looking for a significant source to know about how to claim overpaid tax from HMRC, then you just have found the right post. First, we will see the P800 tax calculation process of HM Revenue & Customs. This means that HMRC will automatically issue any tax repayment; you don’t have to claim it. But, you will need to make a claim in case you have overpaid tax and did not receive a P800 tax calculation from HMRC. Continue reading this blog to know more about how to claim overpaid tax from HMRC. Turn to CruseBurke for managing and recording finances and for claiming overpaid taxes! We have a team of skilled accountants who will handle everything with HMRC on your behalf. Contact us right away! When can I Overpay on Employment Income & Pension Income? If you get a pension income or employment income and pay your tax via PAYE, you might overpay tax. You can pay too much tax on employment income if: Your employer was utilising the incorrect tax code. At the same time, you have more than one job. Other income which HMRC taxes through your tax code has decreased. Your situations changed; for instance, you switched from part-time to full-time work. You have a new job, and for a time, you had an emergency tax code. You are a pupil who works during off days. You ceased working and had no taxable income or benefits for the remaining year. For a portion of the tax year, you have worked. You can overpay tax on pension income if: Your taxable income has decreased; You had more than one pension (more than 1 source of PAYE income). You overpaid tax on a total pension sum. Your pension provider was utilising the incorrect tax code; Your tax code contains the incorrect amount of state pension. What is a P800 Tax Calculation? The HMRC will get details about your total received income, amount of tax paid, and the value of received benefits-in-kind within the tax year from your employer or pension provider. With the help of this information, HMRC will automatically carry out a reconciliation in order to calculate you have paid the correct amount of tax. You will receive a P800 tax calculation by HMRC if they think you have not paid the correct amount of tax. Therefore, you have to check this calculation carefully because HMRC can have fewer or incorrect details to work out your tax accurately. In case HMRC thinks you have paid the extra tax, they will automatically issue you a tax repayment; you don’t need to claim it. And, if HMRC thinks you have not paid a sufficient amount of tax, they will write to you which explains how you can repay tax to them. How to Claim Overpaid Tax from HMRC for the Current Tax Year? You have to inform HMRC why you think you have overpaid tax before the end of the tax year. You have to tell only if you have paid too much tax through the Pay As You Earn (PAYE) system. You can call HMRC directly to inform them. You have to gather the following details before calling HMRC: Your name, job, address, and NI (National Insurance) number. For the current tax year, estimation of your income and pensions from every source. Your employer or pension provider details such as PAYE scheme reference number displayed on your payslip, or ask them for it. For future reference, do ensure you have kept a record of the following: Advisor name you spoke to Time and date of the phone call Communication between you and the advisor In order to support your claim, you may have to send some more details. HMRC will let you know about those details if needed. After processing your claim, HMRC will issue you a new tax code. It means if there is any refund, it will be added to your pension or wages, and you will automatically get the amount through the payroll. This will result in a tax refund or lower tax deduction through PAYE. You might have to claim a repayment directly from HM Revenue & Customs. This is when the refund is due towards the end of the tax year, and you have already received your final salary. Unable to claim your overpaid tax? Let us handle this! Conclusion We hope now you have understood how to claim overpaid tax for the current year. You will have to provide those above-mentioned details and extra details in order to support your claim. Therefore, you should keep a record of your income and paid taxes properly. And, we will recommend you to take help from a professional for recording your finances and claiming repayments. Reduce your business burden by letting us manage & record your finances! Our team could help you claim what is rightfully yours! So, Contact us now! Disclaimer: This article intends to provide general information on how to claim overpaid tax.

Is Cash in Hand Work Illegal in the UK?

George30/09/2021Business , Finance , Personal Tax

Accepting cash in hand work? If yes, then you should know how you’ll be taxed on it. The taxes will be based on your circumstances, for instance, whether you are a registered self-employed person or have a job. This blog will explain how HMRC reviews cash-in-hand work and what you must do in the most common situations. Are you having trouble registering as a self-employed person? We’ll get your self-employed business up and running at low cost and less time. So fill out this form right now to save time & money! What Exactly Is a Cash In Hand Work Payment? It refers to the payments, where an employer pays an employee or a contractor directly in cash, rather than through e-transfers or bank deposits. While the act of paying is not illegal, it can become problematic if it is used to avoid taxes and National Insurance Contributions (NICs), which adds up to tax evasion and is illegal. This method is used in industries like hospitality, construction, home care and domestic services as it can be used to pay daily or weekly wages to workers. But they must comply with HMRC’s PAYE regulations. Is Cash In Hand Work Illegal? The act of being paid in cash itself is not illegal in the UK. However, it becomes illegal when the income is not declared to HMRC to avoid paying taxes and National Insurance contributions. For cash in hand work to be legal, both employees and employers must meet their tax obligations. For employees: If the employer doesn’t use PAYE, the employee must register as self-employed with HMRC if they are self-employed. They must report cash earnings via Self Assessment. For employers: Businesses that pay cash must record the payments, provide payslips detailing deductions for tax and National Insurance, and pay those deductions to HMRC. Additionally, all employers must submit RTI reports to HMRC every time employees are paid. HMRC Side Hustle Crackdown In recent years, HMRC has been cracking down on individuals receiving cash in hand work payments as part of their side hustles. This HMRC side hustle crackdown is focused on ensuring that all income is properly declared to avoid tax evasion. If you are earning money through a side hustle, even if it’s cash in hand work, it must be reported to HMRC. Failing to declare this income can lead to significant penalties and fines. Benefits Of Cash In Hand Work Payments Cash in hand work payments include several benefits, some of which are described below: For Individuals Cash in hand work transactions carry a lower risk of data breaches and help identify fraud compared to digital payments, as there is no risk of check bounce. They do not leave a digital trail, thus helping in more privacy and security compared to electronic payments. Note: Privacy does not exempt workers or businesses from keeping proper records or declaring income to HMRC. They are straightforward, eliminating the need for complex electronic systems and avoiding the frustration of system crashes and internet or server connectivity issues. For Businesses Businesses have an advantage in this way, that can avoid high transaction costs charged by card issuers and banks, especially for smaller transactions by accepting cash payments. Cash can help provide a backup for electronic payment systems, as it works even during blackouts or power outages or when the digital networks are down. This can also help in immediate cash flows, where businesses can receive instant access to funds through cash transactions, and can be used for immediate operational needs. Disclaimer: These benefits relate to the medium of exchange (physical currency) and not the legality of payment for work. All income earned must still be declared to HMRC in the UK, regardless of whether it is paid by bank transfer or in cash, to comply with tax laws. Drawbacks Of Cash In Hand Work Payments Cash in hand work payments have various drawbacks or limitations, which can arise due to various reasons, like: Legal Risks If proper documentation is not done, cash in hand work payments could lead to tax compliance issues and various legal consequences. Lack of Tracking Physical cash payments do not automatically create digital records like card transactions, making them difficult to track. Moreover, it might lead to human error, making it harder to prove income to HMRC. Tax Compliance and Legal Issues It is illegal to fail to declare income to the tax authorities, including cash income. This can result in heavy penalties, fines and even imprisonment for individuals. What are Your Responsibilities When You Pay Your Employees Cash in Hand? When you are paying your employee cash in hand work in the UK, you remain responsible for deducting and remitting Income Tax and NICs through the PAYE system to the HMRC. Failure to comply with these responsibilities can result in heavy fines, penalties and legal consequences for non-compliance. The following are your responsibilities as an employer: Report To The HMRC You must ensure to submit accurate and timely returns to the HMRC, reporting your employee’s earnings and the deductions made through PAYE. Providing Payslips Employees are entitled legally to a detailed payslip with every payment, whether it is cash or through bank transfer. Complying With Minimum Wage Laws As an employer, you must ensure that the gross pay for all working hours meets the National Minimum Wage requirements. Meeting Statutory Entitlements You must remain responsible for paying the employees statutory benefits, statutory sick pay or maternity pay. Can An Employer Get Into Trouble For Paying Cash In Hand? Yes, an employer can get into serious trouble for paying cash in hand, if they are doing it to avoid declaring income and paying taxes, this constitutes tax evasion. This can include failing to deduct tax and National Insurance through PAYE, failing to report these payments to the HMRC and paying less than the National Minimum Wage. Penalties can be either heavy fines or prosecution and imprisonment, and employees may lose important employment rights and benefits. There are various …

Payroll and PAYE – A Complete Guide For First Time Employers

George30/08/2021Payroll & PAYE , Personal Tax , Tax Issues

Payroll could be complicated for numerous foreign managers and companies that need to perform business transactions within the UK. So, in case you’ve got come to the point of setting up a payroll system and the thought of running PAYE fills you with fear, or you feel that you don’t know enough to make things right, then no need to worry as this straightforward blog will help you understand things better! This blog is based on the following essential steps to get the payroll done effectively. Enrol as an employer with HM Revenue & Customs Get yourself registered for PAYE Collect Workers details Utilise payroll software So let’s explore the details 1. Enrol as a Business Owner with HMRC First of all, make sure that whether you wish to enrol as a business owner. Ordinarily, you’ll have to do so if you are going to recruit your first employee or utilise subcontractors for development work. Moreover, you’ll have to be enlisted as a business owner if you’ve set up a local company and planned to pay yourself income as a director. Use this form to enrol as a proprietor. After becoming a business owner for the first time, you need to understand your legal obligations towards your employees. As a business owner, the charge and work obligations you have for your staff will depend on the contract you provide them and their employment status. HM Revenue & Customs have delivered a checklist for first-time business owners, which we suggest you read. Are you looking for a professional to help you with employment contracts or understand your responsibilities as a business owner? Then at CruseBurke, we have a team of skilled accountants that provides solutions to all your business problems! 2. Get yourself Registered with PAYE After registering and receiving your confirmation letter as a business owner by HMRC, you have to register online to pay taxes and NICs. This concept is termed PAYE. 3. Collect Workers details Make sure you collect all the necessary details from your new workers. You’ll require: Full name, DOB Start date National insurance number Home address Affirmation of whether they have other employments or a Student loan HMRC have made the data collection process simple as you’ll ask your new worker to fill within the online HMRC starter form. Before giving you all the required information, the newly hired employee will completes the starter form online, prints it out and sign it. 4. Utilise payroll Software The whole process will be automated with the help of a cloud-based payroll software. It will reduce your essential time and stress by taking care of tax calculations, NICs, your business stipend (if you’re entitled to one) and by producing payroll slips for workers. In addition, it will automatically generate your Real Time Information (RTI) reports submitting it to HM Revenue & Customs and reduces your burden by producing payslips for workers. Final Thoughts Famous software like QuickBooks, Sage and Zero provides you with packages that include payroll system with support. If you utilise one of these accounting software, it’ll make the payroll process easier for you. Tackling payroll by yourself is still daunting. Our payroll team can help you out with this. We are a team of professionals who offer training and support to help you get your payroll system up and running. So reach us now to save your time and grow your business like never before! Disclaimer: The content in this article is general in nature.

Is Client Entertainment Tax Deductible?

George24/08/2021Personal Tax , Tax Issues , VAT

One of the most important marketing tactics that many businesses use is business entertainment, especially for retaining new clients and customers. Spending cost on business entertainment matters a lot when you want to build a network and attract new clients. So, if you’ve decided to allocate a marketing budget for entertaining clients and customers, you may think that whether the client entertainment is tax-deductible or not. Read on to find out the answer! Getting professional advice from a VAT accountant is preferable to reclaim VAT and to be saved from hefty tax implications that can wipe out your profit. So get in touch with our experts to be on the safe side! What is Entertainment as per HMRC? Entertainment is anything done for hospitality. Here is a list of common examples of entertainment: Offering food and drink Providing accommodation Provision of concert tickets and theatre Entry to sports events and clubs Use of capital assets for entertainment purposes Is Client Entertainment Tax Deductible? The simple answer to this question is ‘no’. As you can normally recover input tax, you paid on goods or services exclusively for business purposes. Generally, the cost incurred on entertainment for clients or customers is not considered business entertainment. For this reason, it is not tax-deductible and VAT cannot be recovered from it. However, still, there are few instances where a person can reclaim VAT, but the rules are complex and troublesome. For instance, if there is an entertainment party where you have invited your staff or employees, input tax on the cost spent on employees can be reclaimed. But still, reclaiming VAT on it is not that simple. If the employees acted as the host at the party, then the cost incurred on employees cannot be reclaimed. Say Bye to your financial worries with CruseBurke! Contact today! Is Client Entertainment an Allowable Deduction for Corporation Tax? According to HMRC, client entertainment is not an allowable deduction for corporation tax purposes. Hence, you need to pay for the cost of entertainment like the cost spent on a dinner for a client from the bank account of the business. In this stance, you need to bear in mind that the expenses that incur from your company need to be a genuine business cost and they must not be extra or excessive. Now, you might be wondering whether is it worth spending on client entertainment. It’s up to you and may vary based on your business’s nature and the clients you want to build up. Although the entertainment cost of the business is not favourable when it comes to taxes and VAT, however, you can establish good relations with your business associates and win new contracts for your business. Therefore, we can conclude that the initial investment needed to win projects is worth your time and money. Entertaining Overseas Clients/Customers You can reclaim the VAT incurred on the entertainment cost of the overseas customers/clients carried out at a reasonable scale, which is done only for business purposes. As per HMRC, an overseas customer is someone who’s not an ordinary resident of the UK or performing its business activities in the UK ( including the Isle of Man). However, there’d be an output tax if there’s a personal benefit to the overseas customer by the entertainment. In this way, it will cancel out any recoverable input tax. In most cases, the private or personal benefit is linked with business entertainment. But if the expenses are strictly for business purposes, the private benefit can be ignored. Need Help…! Knowing whether the client entertainment is tax-deductible can be complicated as there are many factors involved. However, as a general rule of law, it is not tax-deductible as it is not wholly and exclusively done for business purposes. On the other hand, you can reclaim VAT on the expenses incurred on the entertainment cost of employees or overseas customers, provided they’re only for business purposes. For detailed information about business entertainment, you can visit the HMRC website. Whether you’re a startup or an established business, CruseBurke is here to grow your business beyond numbers. So, contact our qualified accountants to sort out your issues! Get an instant quote right away! Disclaimer: This blog post provides general information on the above topic.

How Long Does a Tax Investigation Take? Everything you Need to Know!

George20/08/2021Personal Tax , Tax Issues , VAT

HMRC tax investigation can be a dreadful prospect, especially for the one who has never been through this phase. In the worst-case scenarios, the investigation can take longer duration than normal and its consequences can be stressful. But fortunately, it is rare. The fear of HMRC investigation is natural and understandable. However, this process shouldn’t be that onerous if you’re efficiently handling your accounts. So in today’s blog, we’ll have a look at what is a tax investigation? What are the reasons for tax investigation? What’s its procedure and how long does a tax investigation take? Let’s start! It is advisable to get the help of a tax expert to avoid a Tax Investigation. Get in touch with us now! What is a Tax Investigation? HMRC performs a tax investigation to inspect the business’s finances to ensure that it is paying its due taxes, both current and of the past. You’re legally required to cooperate with the HMRC tax investigation team and it doesn’t imply that you have made something wrong. If you’re handling your finances with proper care and you’re having a qualified accountant, a tax investigation will not be that daunting and time-consuming. Reasons for a Tax Investigation HMRC may investigate the finances of your business for a number of reasons. Taxes can be complex and there are chances of mistakes. But you don’t need to worry if you have made an honest mistake. Here are a few of the common reasons that cause a tax investigation: Your business seems a high risk for HMRC There’re omission, mistake or unusual activity in your accounts There are noticeable inconsistencies between your tax returns like there is a large fall in income Your business is frequently filing tax returns late Your business is the target area of HMRC HMRC is suspecting your business You are having an offshore bank account Your costs are above the industry norms You’re getting income from property HMRC gets a tip-off What are the Taxes that HMRC Investigates? Many people believe that a tax investigation is just about investigating the income tax. But it’s not true. Typically, these are the taxes HMRC can investigate: VAT Capital Gains Tax Corporation Tax Construction Industry Scheme (CIS) Climate change levy Insurance premium tax Landfill tax Insurance premium tax IR35 On the lookout for Tax expert? Reach out to us today for affordable accounting services in Croydon! We provide a wide range of accounting and taxation services to small and medium-sized businesses across the UK! Procedure of a Tax Investigation So, how you’d be aware of a possible tax investigation? Before an investigation, you’ll get a notification from HMRC about the investigation and it may ask you to provide basic information as evidence to support your stance. The data they may ask will depend on the type of investigation they’re performing. You need to provide all the documents to HMRC on time, within 30 to 35 days. Failing to provide the records and data can lead to hefty penalties. The investigation can uncover all the claims and errors. Afterwards, you’ll receive a letter about the outcome of the tax investigation and the due amount you owe to HMRC. The results may not be correct always. So it’s better to consult a tax accountant before accepting the results. How Long Does a Tax Investigation Take? There is not a standard period for a tax investigation by HMRC. The duration of a tax investigation will depend on the investigation level and the paperwork required. This process can take few months, but sometimes it can extend to more than a year or even longer (for complex business structures). In addition, an investigation can be delayed by HMRC to get more information. It is not possible to predict the time limit of an investigation, but you can minimise its length. Cooperating with HMRC and providing the documents on time can speed up the investigation process. This process can take a long time if HMRC finds something new or hidden. HMRC might ask you to provide 20 years of records in case of underpayment of taxes. Usually, an Aspect investigation (where a single aspect of a return is inspected) takes up to 3 to 6 months. On the other hand, a Full Enquiry investigation can stretch to a year and more if the case is complex. And the more time it takes, the more costly it becomes. Quick Sum Up After discussing how long does a tax investigation take, you might be wondering how to avoid a tax investigation or make it less severe. In this instance, you need to maintain and keep all the records in order from the start of your business till now. The more tax records you have, the better. Bear in mind that if you receive a notice for a tax investigation by HMRC, the tidy and up-to-date financial records will help you to avoid problems during the process. Moreover, it will speed up the process of a tax investigation. A tax specialist can assist you better with what to do when you face a tax investigation. CruseBurke offers professional services to avoid or minimise the consequences of a tax investigation. Our accountants and tax experts will resolve any problem in your accounts before they turn into big issues that can lead to a Tax Investigation. Have a query? Contact us today, we’d love to help out! Disclaimer: This blog provides general information on the above topic.

Who Needs to Complete a Self Assessment Tax Return?

George13/08/2021Personal Tax , Tax Issues , VAT

Find out what self-assessment is, who needs to complete a self-assessment tax return, when to submit one and what penalties you need to pay for late payments. Let’s delve into the details. There are over 12.1 million people in the UK who need to fill out and submit a self-assessment tax return to HMRC. The deadline to submit a self-assessment tax return online and pay the previous tax bill is 31st January. For the paper tax return, it is 31st October 2025. If you want to register for self-assessment as a self-employed/sole trader, not self-employed and a partner or partnership, you can register on 5 October 2025. A large number of our clients face problems while registering for self-assessment. Therefore, to make things easy, CruseBurke is offering self-assessment registration services for you to avoid stress and fuss. So what are waiting for click here to register today! What is Self Assessment Tax Return? Self-assessment is a system employed by HMRC to work out the tax on your income. Generally, the tax is deducted from your wages, pensions, and savings via PAYE (Pay As You Earn). But if you or your business is getting any income from another source, you need to report it to HMRC by sending a self-assessment tax return. Who Needs to Complete a Self-Assessment Tax Return? You need to complete a self-assessment tax return to HMRC annually to pay income tax and National Insurance (NI) against your earnings/profit. The tax return needs to be submitted if you: are a limited company director or a business partner are an employee/pensioner with annual earnings of £100,000 or more want to claim tax relief on pension contributions (higher or additional rate taxpayer) have earned £10,000 or over from investment income or savings interest need to pay capital gains tax from selling assets at a profit want to claim child benefit, if your income or the income of your partner is above £50,000 are the trustee of a registered pension scheme or of someone who has died If you receive a P800 notice from HMRC showing you underpaid tax, and you’re not repaying it through PAYE, you may need to file a tax return. are a Lloyd’s underwriter are a religious minister Remember that sometimes you need to pay taxes and NI via PAYE and need to complete your self-assessment. For instance, if you receive an investment income and operate a part-time business along with your employment. Furthermore, limited companies need to file their company’s tax return along with the tax return on personal income. CruseBurke offers financial and tax consultant services for contractors, self-employed individuals, and limited companies to stay on top of their finances. Work with our tax consultants today to address your tax returns! Contact now! When will HMRC Send you a Tax Return? Usually, HMRC will send a return to you if: you have earned income without paying tax on it (like income from investment, land, property or overseas) you’re a pensioner getting old age relief, though you need to send a short return with fewer details your capital gains have exceeded the annual exempt amount (£3,000) you were required to fill in a tax return last year Bear in mind that if you’re already aware of the tax you need to pay, you shouldn’t wait for HMRC to contact you. As it is your responsibility to declare your taxable income. After receiving a tax return from HMRC, you are legally bound to complete and submit it via post or online. On missing the deadline, you need to pay penalties and may also pay interest on the surcharges on any tax you that you need to pay. The deadline for sending tax returns via post is 31st October and online submission is 31st January. Penalties for Late Payments You need to prepare your tax returns before the deadline to avoid errors in the hassle of sending the returns late. You’d be liable to pay interest on unpaid tax and penalties. The standard penalties for sending tax returns late are as follows: Quick Sum Up Hopefully, now you know what is a self-assessment tax return, when to pay it to them, who needs to complete a self-assessment tax return, and the penalties for filing it late. Moreover, if your circumstances change like you receive new income from investments or shares, you need to inform HMRC about the changes. As it will affect your tax return. If you want to avoid paying hefty penalties, feel free to contact our certified accountants for accuracy and efficacy during the process of sending self-assessment tax returns! Disclaimer: This blog is written for general information on the self-assessment tax return.

Property Tax UK: Brief Guide to Buying Residential Property in the UK

George11/08/2021Landlord , Personal Tax , Tax Issues , VAT

Taxes are always unexciting. However, if you want to buy or sell a property in the UK, you need to know the ins and outs of property taxes in the UK. So let’s delve deep into it. Currently, the UK government is focusing more on imposing taxes on residential property. In this instance, certain changes have been made that have added more complexity to the property tax system. In addition, the UK property market has also attracted a large number of foreign buyers to invest in residential properties. So, if you are pondering to buy a property in the UK, you need to take expert advice from our tax accountant before making a final decision. In this blog, we’ll have a look at some of the main property taxes in the UK. Let’s kick off with Stamp Duty Land Tax (SDLT)! Want to buy or sell a UK property, get bespoke tax advice beforehand from our experts to be on the safe side. Contact us right away! Stamp Duty Land Tax (SDLT) Whenever you buy a residential property in the UK, you need to pay SDLT. The rate of tax depends on the worth and nature of the property. There are various tax rates depending on the different tax bands of the value of the property. Here is the table to show the SDLT rates from 1st July to 30th September 2021 as per your property value: However, these rates vary onward from 1st October 2021 In case of buying your first home from 1st July 2021 onward. You are exempted from SDLT up to the purchase of £300,000. In addition, you need to pay 5% if it is from £300,001 to £500,000. You need to pay an additional 3% if you buy a new or additional residential property. If you’re a non-UK resident (not present in the UK for 6 months) you need to pay a 2% surcharge on purchasing a residential property in England/ Northern Ireland. There are many reliefs and exemptions available as per your circumstances. Get in touch with our accountants to mitigate SDLT! Inheritance Tax (IHT) When it comes to property tax in the UK, you can’t overlook inheritance tax. The beneficiaries of the deceased person need to pay 40% of the IHT if the value of the estate is above the nil rate band £325,000. There are many ways to mitigate IHT by transferring the properties to direct heirs like a spouse or civil partner. In addition, you can also provide gifts to your children, donate assets to charities and put the assets into a trust to reduce or avoid IHT. These techniques seem appealing, however, there are severe tax consequences. Therefore, taking advice on inheritance tax is beneficial to avoid paying extra taxes. Capital Gains Tax (CGT) Along with SDLT and IHT, Capital Gains Tax is a tax payable on the increased value of the property at the time of disposal or selling. If a property is not your main home (like buy to let properties, business premises, inherited property or land) and you make a gain by selling or disposing of, you need to pay 28% Capital gains Tax. Sometimes this rate may vary. It should be payable within 30 days of disposal. Although gifts are exempted from CGT, but you need to remember that gifts can have a wide range of tax consequences. So it is a better practice to take expert advice before making a gift. Worried about the Capital Gains Tax and ATED, let our accountant handle it! Annual Tax on Enveloped Dwellings (ATED) ATED is paid mainly by companies owning a residential property above £500,000. This amount is charged as per different bands based on the property’s value. Here is the table that shows the annual charges of the property value from 1st April to 21st March 2022: Property value Annual charge £500,000 to £1 million £3,700 £1 million to £2 million £7,500 £2 million to £5 million £25,300 £5 million to £10 million £59,100 £10 million up to £20 million £118,600 Over £20 million £237,400 These rates increase on annual basis as per the inflation. You can claim reliefs on these in an ATED return. Income Tax If you’re buying a residential property for the purposes of letting, you need to pay income tax on the rent received by the tenant. The rate of income tax starts from 0% to 45% as per the amount of rental yield. The deadline to file a UK tax return is at the end of the tax year (6 April – 5 April) landlords (non-residential) need to submit a UK tax return to show their rental yield, and pay any income tax (by the following 31 January). Succession Planning If a deceased person has not left a will before dying, the government will distribute the estate under UK intestacy law. This law may not be favourable for you when it comes to taxes. Therefore, it is advisable to prepare a will while purchasing a property in the UK. By doing this, it will provide certainty for passing wealth to the person who’s mentioned in the will and it will ensure the tax position of your estate at the time of death. Quick Sum Up Hopefully, this blog has helped you to know the basic details of property tax in the UK. So while buying, selling, transferring or inheriting property in the UK, you need to consider the property taxes like SDLT, CGT, IHT, ATED and income tax. Bear in mind that these taxes vary based on various factors and keep on changing from time to time. Furthermore, the rates are not the same for all. These are different for residential and commercial landlords and for the native and non-natives. In addition, there are many allowances and exemptions available to avoid or mitigate the property taxes of the UK. So taking advice from a tax expert is recommended for detailed tax and …

How to Avoid Inheritance Tax?

George09/08/2021Personal Tax , Tax Issues

When a person dies, inheritance tax is levied on the estate that is transferred to the heirs of the deceased by the government. If you’re planning to transfer the ownership of your estate to your children and loved ones without any deductions to get the optimal benefit from your estate, you might be wondering how to avoid inheritance tax. In this blog, we’ll be discussing few ways to avoid inheritance tax. Let’s explore! Looking for an accountant to work out your IHT? Contact us right away! What is Inheritance Tax? This tax is levied on the estate of the person who has died. The estate includes all possessions, property and money a deceased has left. After the death of the person, the executor of the will must work out the estate and deduct any liabilities from it. The remaining amount will be entitled as “estate” on which inheritance tax is payable. What is the Tax-free Threshold of Inheritance Tax? If your estate is worth below £325,000 (nil rate band) and an extra £175,000 (transferring your main residents to direct descendants). Keep in mind that there is no inheritance tax payable if you are the deceased’s spouse or civil partner even if the estate worth is above the threshold. Moreover, if you transfer your home to your children (adopted/foster/stepchildren or grandchildren) the threshold of inheritance tax can go up to £500,000. In addition, if the value of your estate is below the threshold and you’re married /civil partnership, your unused tax-free threshold can be transferred to your partner, at the time of your death. It means they can have a threshold of up to £1 million. So, it means you don’t need to pay inheritance tax if: The worth of your estate is below the £325,000 threshold You have left everything above £325,000 for your spouse, civil partner, a charity, community sports club or political party How Much is the Inheritance Tax? Currently, the inheritance tax is charged at a 40% rate on the value of the estate above the nil rate band/personal allowance. But, you can bring it down to 36% if you are donating above 10% to charity in your will. Example Let’s say the value of your estate is £700,000 and your tax-free threshold is £325,000. The inheritance tax will be levied with the 40% rate on £375,000 (£700,000 – £325,000) Calculating your asset and keeping track of everything to find out the inheritance tax can daunting and time-consuming. Therefore, you need to talk to our accountants to find out how much inheritance tax you will pay after your death. How to Avoid Inheritance Tax? Want to know how to avoid inheritance tax legally? There are many ways to avoid or decrease inheritance tax on your estate. The following are the legal and tested ways to reduce or avoid inheritance tax: 1) Make a Will The simplest way to be saved from inheritance tax is to make a will. By making a will you can mention the people whom you want to transfer your estate after your demise. By doing it, you can better manage and control your estate as per your desire and can minimise your tax. If there’s no will, the government will decide to distribute them as per intestacy rules. 2) Provide Gifts It is one of the great ways to reduce your inheritance tax. And there is no limit to the number of gifts. But if you give assets away and survive more than 7 years, then you don’t need to pay any tax on any of the assets that you gifted. But if you die earlier than 7 years, your estate will be taxed on a reducing scale. 3) Leave your Assets into a Trust You don’t need to pay any inheritance tax on the assets that you put within a trust. These assets are IHT-free and can be given to your children when they turned 18. 4) Keep your Asset Below the IHT Threshold Currently, in 2025 the inheritance tax threshold known as the nil rate band is below £325,000. This rate is transferable if your estate worth is below it. Additionally, the main residence transferrable allowance is £175,000. It means married couple or civil partners can pass their assets up to one million from IHT. 5) Put your Assets into Interest in Possession Trust You can earn some interest in your estate by putting your assets into interest in a possession trust and can avoid IHT at the time of your death but you have to pay income tax on the amount your receive. 6) Cash out the Life Insurance By taking out life insurance and putting it into the trust, you can be saved from the potential IHT bill. 7) Leave 10% to Charity If you provide 10% of your assets to charity, the IHT rate for the rest of the assets will be reduced to 36%. 8) Spend More Money One of the best ways to stay away from the 40% inheritance tax liability to your beneficiaries is to enjoy life by spending it to their utmost. You can enjoy your money by buying a new car or by going for a world tour, etc. This will reduce your IHT to the nil rate band and you can avoid it IHT. Quick Sum Up To sum up, you have got some important tips on how to avoid inheritance tax. By following these, you can leave a great portion of your wealth to your beneficiaries. In addition, you can gift them to your loved one when you’re healthy to remain alive for 7 years to avoid inheritance tax. Moreover, you can spend it yourself or you can donate it to a trust to avoid IHT. And there are multiple ways to reduce IHT like providing 10% of your wealth to charity, etc. By following the above tips, you can save a large sum of money. Still, if you want more tips to avoid IHT, reach out to our …