Category: Tax Tips Articles

The deadline for renewing Working Tax Credit (WTC) and Child Tax Credit (CTC) is 31st July 2014. If you receive tax credits, make sure that you renew them by this date or your payments will stop and you’ll be sent a summary.

Your claim for tax credits will then end 30 days after you are sent the summary if you don’t send your renewal.

HMRC has issued its top tips on how to go about renewing:

1. You should have received a renewal pack from HMRC before 30 June. If you haven’t received your pack, you should contact the Tax Credit Helpline on 0345 300 3900.
2. You only need to reply to HMRC by 31 July 2014 if you receive both an Annual Declaration form (TC603D or TC603D2) and an Annual Review notice (TC603R). You can renew your tax credits online, if you received a TC603D form. But if you received a TC603D2 form, you can only renew your tax credits by phone or by post.
3. If you receive only an Annual Review notice, your claim will be renewed automatically, so you don’t need to get in touch with HMRC.
4. Check all the information in your renewal pack and ensure that all the changes reported in the previous year are included. Contact the Tax Credit office if it isn’t correct.
5. If any changes are required, contact the Tax Credit Helpline, or in writing.
6. When contacting the helpline make sure that you have your NI number and password (if you have one) plus the amount of your household’s total income for the previous tax year.
7. Even if you’re no longer eligible for the current year, you should follow the instructions on the form to confirm your claim for the previous year.

For more information on claiming tax credits, Lawpack’s bestselling guide Tax Answers at a Glance can help. Packed full of tax tips and advice on the maze of taxes and credits available.

 

External links

• GOV.UK: How to renew tax credits

 

Published on: July 7, 2014

by Daniel Jones

Many Britons are living with significant financial worries looming, according to the latest research on the matter.

New figures from Gocompare.com show that 36 per cent of people around the UK are worried about the rising cost of living and the bills they must pay, with 47 per cent admitting that they intend to spend less on their food shopping in a bid to make their money go a little further in 2014.

What’s more, some people are worried about altogether more serious matters, such as losing their job (five per cent) and not being able to pay their mortgage or rent (three per cent).

Claire Peate, customer insight manager at the website, said: “While there are signs of a growing confidence in these figures in terms of relatively few worries about job security or rising interest rates, it is clear that the squeeze on budgets is still being felt.”

Perhaps the most worrying aspect of the study was the finding that some 28 per cent of people in the UK don’t feel as though they can make any extra savings, meaning that they are already stretched to the limit.

Such issues might be of concern to landlords, who need to know exactly how much rent they can charge for their properties without forcing tenants into a position where they can no longer afford to pay.

No landlord wants to put tenants off with high rental charges that result in a property standing empty, so it’s wise to remain aware of the position many people find themselves in.

Of course, it’s not only mortgage and rent payments worrying Britons, as other matters that were found to be of concern included not being able to save money, failing to put cash away in a pension for retirement and building up debts on credit cards.

This is before petrol prices, car insurance premiums and loan interest repayments were taken into consideration.

Published on: January 6, 2014

by Daniel Jones

Being made redundant is often a huge blow to workers, but to subsequently be taxed more than is fair on any potential payout will only serve to deepen one’s dismay.

This is why the Low Incomes Tax Reform Group (LITRG) has urged those who have received a redundancy payout in recent years to make sure that they have paid the right amount of tax. In some cases, no tax at all may have been due, so it’s important for people to check that they were not charged.

According to the organisation, when an employer becomes insolvent, payouts from the Redundancy Payments Office will often have tax deducted when it shouldn’t have been. Because the office doesn’t operate a tax code, it takes the basic rate from lump sums.

What it fails to consider is the fact that the first £30,000 of any redundancy payout is tax-free, so people should always be able to enjoy this sum without handing any over to HM Revenue & Customs (HMRC).

LITRG has urged everyone who thinks they may have been wrongly taxed on redundancy money to get in touch with HMRC as soon as possible to work out the specific details of their case.

Anthony Thomas, chairman of LITRG, said that anyone who is made redundant and told that their employer cannot or will not offer a payout should get in touch with the RPO, as it may be able to secure a protective award on their behalf.

“The tax rules on redundancy packages are complex, but redundancy payments are generally tax free up to the limit of £30,000. This means that if you receive a redundancy payment, it is likely to be exempt from tax. The package you receive, however, may also include elements that are taxable and liable to National Insurance contributions, such as unpaid salary or holiday pay,” Mr Thomas explained.

People should typically be eligible for redundancy money if they have worked for their employer for at least two years.

 

• Surviving Redundancy – An Essential Legal Guide: Use our essential guide to get expert advice on your employee rights.

 

Published on: November 8, 2013

At this time of year the thought of doing your tax return can be daunting and it’s easy to put the whole thing off. But it’s important to get it done and, with the deadline looming, not to leave it until the last minute.

Read our top tips from the experts on how to make the process easier:

1. Don’t leave it too late

Last year 500,000 people left it to the day of the deadline to file their tax return, according to HMRC. But this can be a dangerous thing to do. This year the deadline falls on a Saturday and HMRC’s helpline is only open until 4pm. What happens if you need telephone assistance? The helpline will be swamped with calls and won’t even be open in the evening.

It’s best to leave yourself a bit of breathing space by not leaving it to the very last minute.

2. Don’t fill in your tax return all in one go

Break up the tax return into manageable chunks. Spread doing the sections over several days, to help you avoid getting bored to death.

The online return is split up into sections, which makes it easier as you can save each section as you go along. It also gives you plenty of time to check things over properly.

3. Get your paperwork in order before you begin

Collate all your paperwork so you have it to hand before you start as this will make the process so much quicker.

Look at your bank statements and check out any interest payments on your accounts, investment properties that are liable for tax or investment dividends.

Check that you’re claiming for all the allowances that you’re entitled to (e.g. a percentage of mortgage interest or council tax if you run a business from home).

4. Make sure you’ve got your unique taxpayer reference

To use the HMRC self-assessment website you need a unique taxpayer reference. If you haven’t got it, it can take up to ten days to receive your username and password in the post.

For security reasons HMRC will not email you, it’s vital that you give yourself plenty of time to receive it if you haven’t registered with the site before.

5. Help from Lawpack

If you want expert guidance on completing your tax return, our Tax Return Organiser Kit can help. Written by chartered accountants HM Williams, previous winners of the Butterworth Tolley Best Tax Team Award, it guides you through each section of the tax return and includes expert tips on how you can reduce your tax bill.

Other information

• Top tips to filling in a tax return correctly
• Upcoming tax changes in 2015

 

External links

• Gov.uk: HMRC self-assessment helpline

 

Published on: January 27, 2015

This year a range of tax changes are happening. We highlight the ones that could affect you.

1. Increase in personal tax allowance

No-one will pay any income tax at all from April 2015, if they earn below £10,600.

2. The higher-rate income tax threshold is increasing

The higher rate income tax threshold is rising in April to £42,385 per annum.

More information

• Gov.uk: Tax and tax credit rates and thresholds for 2015-16

 

3. Carer’s Allowance

From April 2015 the earnings threshold for Carers’ Allowance will be raised to £110 a week.

More information

• Gov.uk: Carer’s Allowance

 

4. Married couple’s tax break

From 6 April 2015 married couples, or civil partners, who are not higher-rate taxpayers, will be able to transfer £1,000 of their existing personal allowances between themselves so they can limit tax.

More information

• HMRC: Transferable tax allowances for married couples and civil partners

 

5. CGT due on residential property owned by foreigners and ex-pats

As of this year British ex-pats and foreigners who own residential property in the UK will have to pay capital gains tax (CGT).

CGT, however, will only have to be paid on any gains made after April 2015.

More information

• Gov.uk: Implementing a capital gains tax charge on non-residents

 

6. Independent Living Fund closed

On 30 June 2015 the Independent Living Fund (ILF), which provides financial assistance to help people with disabilities live an independent life in the community , is closing.

Funding will be incorporated into local social care arrangements through local councils in England and devolved governments in Wales. Scotland is making its own arrangements and proposing a new Scottish Independent Living Fund (SILF)

People who already have ILF care packages will have to transfer to new local arrangements.

7. Pensioners will be able to top up their state pension

From October 2015 existing pensioners, and those due to reach state pension age by 6 April 2016, will be able to increase their state pension entitlement.

Pensioners will be able to top up their pension income by up to £25 per week my making a lump sum Class 3A Voluntary National Insurance contribution.

The amount people will need to pay to receive the extra pension will depend on their age. For example, to get an extra £1 a week state pension for life, the lump sum payment for a 65-year-old would be £890, compared to £674 for someone aged 75.

This tax reform has been introduced to help pensioners who will not be eligible for the higher, flat-rate pension coming in next year.

More information

• Gov.uk: State pension top up calculator

 

8. Tax Free Childcare

From autumn 2015 Tax Free Childcare is replacing childcare vouchers.

The government will contribute up to 20 per cent of the first £10,000 of registered childcare costs per child, per annum.

The scheme will be available to children under the age of five, and all working parents with children under 12 will be covered within the first year. Disabled children under the age of 17 will also be eligible.

Eligible for the scheme will be those who earn under £150,000 per year and don’t receive help with childcare via tax credits.

More information

• Gov.uk: Introducing a tax-free childcare scheme

 

9. Winter Fuel Payments removed for certain ex-pats

From Autumn 2015 Winter Fuel Payments will be cut for those living in hot countries.

Winter Fuel Payments will be withdrawn from expats living in a European country with an average winter temperature higher than the UK.

The seven countries affected are: Cyprus, France, Gibraltar, Greece, Malta, Portugal and Spain.

Published on: January 12, 2015

Yesterday George Osborne informed MPs of the current state of the British economy. He outlined various tax reforms that may affect you – the biggest one, Stamp Duty:

1. Stamp duty thresholds changed

As of midnight on 3rd December, the rates of stamp duty have changed. They now only apply to the amount of the purchase price that falls within the particular duty band.

The new rates are as follows:

• Up to £125,000 – 0%
• £125,001 to £250,000 – 2%
• £250,001 to £925,000 – 5%
• £925,001 to £1.5m – 10%
• Above £1.5m – 12%

Example: if you buy a house for £200,000, you won’t pay anything on the first £125,000, and will then pay 2% on the next £75,000. Your total bill will be £1,500. Previously you would have paid £2,000, which would have been 1% of the price of the property.

2. Fuel duty frozen

3. Pensions and savings

• From April 2015 spouses will be able to pass on their partner’s Individual Savings Accounts (ISAs) tax free when they die. Previously spouses would have to pay tax on their partners’ ISAs.
• The annual allowance for ISAs will increase to £15,240 in April.
• Tax- free annuities for dependents of people who die under 75.

4. Personal taxes

• Personal tax allowance to be raised to £10,600 in April.
• Higher rate income tax threshold increasing to £42,385 in 2015.
• From 1 May children under 12 won’t have to pay air passenger duty and the age limit will be increased up to the age of 16 from 2016.
• The 55% death tax passed on to loved ones abolished.
• £90,000 charge introduced for non-doms who have been resident in the UK for 17 of the past 20 years.
• Families of aid workers who die in course of their work won’t have to pay inheritance tax (IHT).

5. Business taxes

• An inflation-linked increase in business rates capped at 2%.
• National Insurance on young apprentices abolished.
• Research and development tax credit raised for small and medium-sized (SMEs) businesses.
• Support extended to small businesses with £500m of bank lending plus £400m government-backed venture capital funds which invest in SMEs.
• £45m package of support for exporters.

6. Welfare

• Two-year freeze in working-age benefits.
• Migrants to lose unemployment benefits if they have “no prospect” of work after a period of six weeks.

7. Education

• £10,000 loans for postgraduate students who are studying for masters degrees.
• Employment Allowance worth £2,000 extended to carers.

Other information

• Stamp duty changes mean big savings for buyers

 

External links

• Gov.uk: Autumn statement 2014
• Gov.uk: Stamp duty land tax rates
• HMRC: Stamp duty land tax calculator for new rules

 

Published on: December 5, 2014