Tax Issues Archives - Page 17 of 20

News,May 2018

What is an Annual Return? – A Beginner’s Guide

George02/09/2021Limited Company , Tax Issues

Every year, as a registered company owner in the United Kingdom, you must file your annual return to Companies House. In this article, we’ll go over what is an annual return, what information you’ll need, and what penalties you might face if you submit it late. Whether you’re just starting or have been in business for a while, our Chartered Accountants can help you build your business. So don’t hesitate to get in touch with us now! What is an Annual Return? It is a document which summarises the general facts about your company, including: The nature of a company’s operations Your registered office address as well as your SAIL address Share capital Contact information Directors’ information Shareholders’ information Your annual return, as the name suggests, must be filed with Companies House every year. You have 12 months to complete your yearly return; however, you can submit your information more than once during that time. This allows you to update business information without worrying about missing deadlines. You can avoid the delay by filing the most up-to-date company information first. Then, to give correct and up-to-date information, you can file a new return with Companies House detailing the modifications or updates. Remember to keep your annual returns separate from your tax return and your company’s annual accounts. You don’t need to file the one because it’s not the same as the other. Information to Include in the Annual Return The information that needs to be included in your annual return is as follows: Name, DOB, residence, and other details about the company secretary and directors. Your company’s contact information, If there is no other address, records will be stored at the registered address and single alternative inspection location (SAIL). The type of business you have (public or private) and the shares it issues. You must submit information to your stockholders in specific cases. Information about the most important business activity. To describe what your company does, you must choose your principal business activity from a catalogue of SIC (Standard Industrial Classification) codes. The Formula of Annual Return The Formula of Annual Return is: Annual Return= Final Value of Investment – Initial Value of Investment / Initial Value of Investment * 100 Unable to calculate your annual returns? Let our professionals handle this! Company Owners are Legally Obliged to File an Annual Return If you are an owner of a company, you are legally required to file an annual return on time, and in case you fail to, you may be charged with a penalty. You can see late filing penalty fees from the Government of the UK. File your Annual Return Online Through the Companies House WebFiling, you can easily file your annual return. It will only charge you around £13, and you can pay it through a credit card or PayPal. To use this service, first, you need to get registered with Companies House for WebFiling. Grow your Business with CruseBurke! We hope you now have a basic knowledge of annual returns after reading this blog. Besides this, we know that you’re busy with your business and have no time to handle company accounts, taxes and reports. Let us do that! CruseBurke is one of the UK’s driving accounting firms with a group of qualified bookkeepers, chartered accountants, and tax specialists. We solve your business problems with the best possible solution and take your business to another level. We provide accounting services for small businesses, startups, sole traders, contractors, partnership & LLP, and landlords. Get an instant quote now for these services! Disclaimer: This blog contains general information about annual returns.

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.

How to File Company Tax Return!

George30/08/2021Limited Company , Tax Issues

All limited companies in the UK need to file a company tax return at the right time. In today’s blog, we’ll have a look at what is a company tax return, how to file it, when you need to file it, and what are the penalties for late filings. Here’s all you should know as a limited company owner. What is a Company Tax Return? A company tax return (form CT600) is the financial information that includes spending, profits and corporation tax figures reported to HMRC annually. You can also report it to find out how much corporation tax you have to pay. It contains the following documents: Form CT600 Company’s annual accounts Calculations of the company’s tax Any supplementary documents If a company received a notice from HMRC to complete a tax return, then a company must do it as early as possible. It typically happens after the year-end. The deadline for filing a company’s tax return is a year (12 months) after the end of its accounting period. Get inclusive accounting, bookkeeping, tax, and company formation services with our qualified accountants at an affordable rate. Get in touch today! Filing a Company Tax Return To file a company’s tax return, you need to ensure that you have: Company’s statutory accounts (annual accounts) that are balanced means your total assets should match with your total liabilities and shareholders’ equity The government gateway ID and its password. If you don’t have one, you need to create it to use the service Your Companies House password and authentication code (in case of filing your accounts together). You can get these when you register with Companies House You can use the paper form (CT600) if: You have a valid reason for not filing online You want to file in Welsh And, you need to complete and post form WT1 to describe the reason behind using the paper form. To file your accounts with Companies House and the Company Tax return with HMRC. You need to have online account details of HMRC, Companies House online account details, and company registration number. Here is what you need to do as per your situation: If you want to file accounts and tax returns together, you can use HMRC’s online service or CruseBurke‘s services If you want to file your accounts with Companies House separately, you can send your accounts to Companies House online or Contact us to do it on your behalf If you want to file a tax return with HMRC separately, you can use HMRC’s online service or our services to do it Note: You’ll only need to prepare and file your Company Tax return yourself if you’re fully confident to do it. Otherwise, you might get in great trouble. So, taking the services of an accountant is worthwhile for the accuracy and efficacy of your return. If you need the help of an accountant or tax expert, contact our qualified accountants at CruseBurke! Deadlines for Completing Return To file a return and to pay taxes, you need to follow the below-mentioned deadlines: The return needs to be sent to HMRC within 12 months after the year-end Any Corporation Tax due must be paid within 9 months and a day after the end of the accounting year Suppose, a company’s accounting period is ending on 31 December 2019, it needs to pay any Corporation Tax that is due by 1st October 2020 and file the return by 31st December 2020. Generally, these are filed together. In case of filing them late, your company needs to pay financial penalties. Penalties for Late Filing On missing the deadline of the return, you need to pay fines. If you’re: One day late, you need to pay a £100 penalty Late for three months, you need to pay another £100 penalty Late for six months, you need to pay an additional/extra penalty of 10% on your corporation tax bill. A year late, you’re levied another 10% penalty on your estimated corporation tax bill On filing a return consecutively late for three times, the £100 penalty will increase to £500. Quick Sum Up So after reading this post, you have understood: what is a company tax return, how to file them, when you need to file them, and what penalties you need to pay in case you file them late. Bear in mind that only limited companies need to submit it. If your company is dormant for corporation tax, you don’t need to submit it. Moreover, sole traders and partnerships also don’t need to submit a return but their earnings are reported to HMRC. Turn to CruseBurke for preparing and submitting the return and save your time, money, and stress. We have a team of skilled accountants who will handle everything with HMRC and Companies House on your behalf. Contact us right away! Get an instant quote for a tailored offer at a fixed fee! Disclaimer: This blog is written for general information on the company’s tax return.

How Much is VAT in the UK?

George26/08/2021Tax Issues , VAT

After Brexit, the UK VAT system experienced significant updates, especially from 2021 onwards. Though the major reforms have settled, it’s still essential to understand how much VAT you must pay in 2025, what VAT rules apply, and how it affects your business or purchases. Need professional advice from a VAT accountant? Get in touch with our experts today! How Much is VAT? Let’s see how much VAT you need to pay in the UK in 2025-26. Three different VAT rates are charged on various types of goods and services in the UK. Standard Rate (20%) Currently, the standard VAT rate of 20% is levied on most goods and services. This rate is also applicable to those goods that are below the standard distance selling EU VAT threshold sent from Northern Ireland to a non-VAT registered EU client. Reduced Rate (5%) A reduced rate VAT is 5%. Some of the goods and services are charged at a reduced rate, like: Home energy Children’s car seats Mobility aids for seniors Zero Rate (0%) As evident by the name, it means that it is charged at a 0% rate. It means that your customers will pay you 0% in VAT. However, still, you need to record and report it in your VAT returns. Some of the common examples of zero-rated goods are: Basic food items Books & newspapers Children’s clothing Most goods sent from Great Britain to countries outside the UK Most goods sent from Northern Ireland to countries outside the UK and EU Along with these rates, there are some goods and services on which you don’t need to pay VAT means they are exempt from VAT. Postage stamps, financial and property transactions are common examples of it. However, you don’t need to include it in your taxable turnover. You need to bear in mind that the VAT rates keep on changing, so you must be up to date with the VAT changes. Want to register for VAT? Today Register For Vat without any hassle, at CruseBurke. VAT Reforms Post-Brexit (Still Applicable in 2025) Though no major VAT reforms have been introduced recently, the post-Brexit VAT changes from 2021 remain in effect: The £15 VAT exemption for imported low-value goods is no longer valid. Sales under £135 to UK customers from overseas are now taxed at the point of sale, not at customs. Online marketplaces (like Amazon and eBay) are responsible for collecting VAT on behalf of overseas sellers for goods sold to UK customers under £135. These changes aimed to simplify VAT collection on imports and reduce fraud, while also leveling the playing field for UK businesses. Do You Need to Charge VAT on Exports to the EU? If you’re selling goods to EU customers and you’re a VAT registered business, the good news is that you can sell your goods at a zero rate. From 2025 onwards, the goods you send to EU member states will be treated equally as the goods that come from a non-EU country. However, import taxes are payable on them. As goods, services of the UK supplier will be considered same as the supplier outside the EU. Summing Up To sum up, you have understood the VAT changes and reforms that have recently been made. In addition, to find out the answer to ‘ how much is VAT payable in the UK’ you need to look at various factors like the business platform, size, nature and the location of your customers, etc. VAT can be a complex area for many, therefore it’s better to get in touch with a tax expert for help. So, look no further other than CruseBurke! Contact our qualified VAT accountants and sort out your issues! Get an instant quote right away! Disclaimer: This blog post provides general information on VAT.

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 …

Is There Stamp Duty On Commercial Property?

George26/07/2021Landlord , Tax Issues

Whenever you buy a residential property or land above the SDLT threshold in the UK, you need to pay stamp duty land tax (SDLT) on it. But is Stamp Duty payable on the commercial property too? The answer is yes! Let’s dive into the details. Worried about Stamp Duty Land Tax (SDLT)? Get in touch for help! What is Stamp Duty? In England and Northern Ireland, SDLT is a compulsory tax that buyers pay on most property transactions. This tax is called LBTT (Land and Building Transaction Tax) in Scotland. And in Wales, it is generally referred to as Land and Building Tax. This tax is applicable to both freehold/leasehold property and land transactions that are above the SDLT thresholds. You need to report most of the property transactions to HMRC even if you are not paying any SDLT. How SDLT is Calculated? You need to pay SDLT based on the purchase price of residential or commercial property as per your tax bands. You don’t need to pay SDLT on your commercial property up to £150,000. For example, if someone bought a commercial property for £185,000, SDLT is not payable on £150,000 but 2% of it would be payable on the remaining £35,000. The tax depends on multiple factors like the lease term, purchase price, etc. Remember to send SDLT returns to HMRC and pay the tax due within 14 days of completing the transaction. You can use the government calculator to know how much SDLT is payable. Looking for a qualified accountant, bookkeeper or tax expert? Get in touch with us right now! Stamp Duty on Commercial Property You need to pay stamp duty on commercial property and transfers. Here are the details of current SDLT tax bands and rates: For purchases up to £150,000, there is no SDLT payable The purchases from £150,001 to £250,000 attract a rate of 2% The purchases above £250,000 attract a rate of 5% If you’re renting a commercial property, the stamp duty is worked out based on different variables that include: Length of the lease term Annual Rent Premium paid for the lease Rates of SDLT on Commercial Property Leases If someone buys a leasehold property, he/she is going to pay SDLT on the lease-purchase price using the below rates. Rates of SDLT on Commercial Property Leases Net present value of rent SDLT rate £0 to £150,000 Zero From £150,001 to £5,000,000 1% Over £5,000,000 2% Stamp Duty and VAT If VAT is payable along with the purchase price, then the SDLT is worked out based on the entire sum that is payable on the property purchase. For example, if a property is purchased at £1,000,000 with a VAT of a 20% rate making a total purchase price of £1,200,000. The SDLT would be calculated at the price of £1,200,000. Consequently, it is double taxation on the buyer of the property, therefore you need to keep this thing in your mind while purchasing a commercial property. Quick Sum Up To sum up, we can say that stamp duty on commercial property depends on the price of land or property. If you want to reduce SDLT, you can remove the things included in the property transactions like furniture, machinery, etc. In addition, you need to work out the items that are eligible for a capital allowance against income tax or corporation tax. Furthermore, you can mitigate or eliminate SDLT on large transactions, with the help of a complex SDLT mitigation scheme. So, it is advisable to take advice from tax experts as HMRC may challenge any reduction done in SDLT. Want to reduce or eliminate your Stamp Duty Land Tax (SDLT)? CruseBurke has a team of tax experts and accountants for your help, Contact us anytime, we’ll get back to you in the shortest time possible! For a customized package, Get an instant quote right away! Disclaimer: This blog provides general information on SDLT.