Here are the key points at a glance:

• Income tax threshold to be raised to £11,500 in April 2017
• Higher rate income tax threshold to be increased to £45,000 from April 2017
• Removal of tax and NI benefits of salary sacrifice schemes with the exception of ultra-low emission cars, pensions, childcare vouchers and cycle to work
• National Living Wage for employees over the age of 25 to rise from £7.20 an hour to £7.50 from April next year
• Annual ISA allowance to be increased to £20,000 for 2017/18
• Employee and employer National Insurance thresholds to be equalised at £157 per week from April 2017
• Insurance premium tax to rise from 10% to 12% next June
• Introduction of a new investment bond
• From April 2018 termination payments in excess of £30,000 will also be subject to national insurance
• Commitment to cut corporation tax rate to 17% by 2020
• Reform of trade loss relief

A few of our clients will receive a letter through the post shortly to remind them the deadline for submitting their self assessment tax return online is 31 January 2017.

Please let us have your accounting records before 31 December so we can ensure your return is filed before the deadline.

Any returns submitted after this date incur an automatic £100 penalty from HMRC, an additional 5% of tax due is added after 30 days and if your return is still not submitted after 3 months, you will be charged further penalties of £10 a day.

Thank you!

National minimum wage (NMW) rates will increase on 1 October by between 3% and 4.7% for workers under the age of 25 and apprentices, and employers need to make sure the new rates are implemented for all hours worked from that date.

 

NMW: age/status	Current rate	New rate from October 2016
21 to 24	£6.70	£6.95
18 to 20	£5.30	£5.55
16 to 17	£3.87	£4.00
Apprentices	£3.30	£3.40

From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance.

The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, no matter what non-dividend income you have.

The allowance is available to anyone who has dividend income.

Headline rates of dividend tax are also changing.

You’ll pay tax on any dividends you receive over £5,000 at the following rates:

• 7.5% on dividend income within the basic rate band
• 32.5% on dividend income within the higher rate band
• 38.1% on dividend income within the additional rate band

This simpler system will mean that only those with significant dividend income will pay more tax.

If you’re an investor with modest income from shares, you’ll see either a tax cut or no change in the amount of tax you owe.

Dividends received by pension funds that are currently exempt from tax, and dividends received on shares held in an Individual Savings Account (ISA), will continue to be tax free.

From April 2016 you have to apply the new headline rates on the amount of dividends you actually receive, where the income is over £5,000 (excluding any dividend income paid within an ISA).

The Dividend Allowance will not reduce your total income for tax purposes. However, it will mean that you don’t have any tax to pay on the first £5,000 of dividend income you receive.

Dividends within your allowance will still count towards your basic or higher rate bands, and may therefore affect the rate of tax that you pay on dividends you receive in excess of the £5,000 allowance.

HMRC is cracking down on tax avoidance – and they can help you spot the signs of avoidance and advice you on the risks involved in using tax avoidance schemes.

These risks have increased greatly in the last two years, with the introduction of new legislation to combat avoidance.

We are seeing a number of avoidance schemes and arrangements being marketed to individuals and businesses as legitimate tax planning.  This can give potential users the false reassurance that HMRC will not challenge their use of the scheme. Such schemes are often marketed as wealth management products, or dressed up as exciting investment opportunities.

If you have recently been tempted by tax avoidance scheme, please look at the following pages of Gov.uk which contain HMRC’s latest information on tax avoidance, set out in simple and straightforward terms.

• Ten things about tax avoidance series gives customers the plain facts about specific areas of tax avoidance in simple terms – see their recently published Ten Things about contractor loan schemes
• Tax avoidance schemes currently in the spotlight gives the latest information on schemes that HMRC believes are being widely offered to help those using them to avoid tax – see their recently published Spotlight 29: don’t fall for it – misleading claims by tax avoidance scheme promoters
• Tempted by tax avoidance gives advice on how to spot a tax avoidance scheme .

There is a new obligation on employers to report to HMRC information about employees where the employers has implemented a DOTAS disclosed tax avoidance scheme which benefits either their employees or themselves and is related to the employment of those employees. The employer must submit details about each employee in relation to whose employment the scheme operates by 19 April following the end of the tax year. The new requirement relates to tax year 2015/16 onwards irrespective of when the scheme was first entered into. Further information is available here.

Budget 2016: everything you need to know

Last week George Osborne, the Chancellor of the Exchequer, delivered a Budget that delivered tax cuts for businesses and individuals. Here are the key points:

Personal tax – As expected, Osborne raised the lower threshold for income tax to £11,500 and the higher threshold to £45,000 – a larger increase than expected. These new thresholds will come into effect in April next year.

More surprising was the cut in Capital Gains Tax. The basic rate CGT was cut from 18% to 10%, with the higher rate cut from 28% to 20%.

Osborne also announced that Class 2 National Insurance contributions will be abolished, with will give self-employed workers a tax cut of more than £130 when it comes into force in 2018.

It wasn’t all cuts, however. Insurance premium tax was increased from 9.5% to 10%. This increase will be used to fund improvements in flood defences.

Business tax – Some good news for small businesses: the annual threshold for 100% small business rate relief increased from £6,000 to £12,000. The higher rate threshold will rise from £18,000 to £51,000. The headline rate of Corporation Tax is also being cut to 17%.

He also snuck in a rise in tax on loans to participate, up from 25% to 32.5%, which follows on from the Dividend Tax and will inevitably hit small businesses harder.

Pensions and savings – The biggest announcements were around ISAs: the annual ISA limit will increase from £15,240 to £20,000. A new ‘lifetime ISA’ for the under 40s will be introduced from April next year, with the government putting in £1 for every £4 saved. The Chancellor said that this is an alternative to a pension fund for the young, who find pensions “confusing.”

Over 85% of contractors are already sending HMRC their CIS returns online, but from April 2016 everyone will have to use the online service.  HMRC will no longer be accepting any paper forms from that date.

To increase filing accuracy, this change will see the introduction of online amendments, online messaging and alerts.

HMRC are also improving the online verification service for contractors, as from April 2017 everyone will also have to use the online service, HMRC will no longer accept telephone verifications from that date.

For contractors currently sending paper returns, you’ll need to register for HMRC’s online services as an ‘Organisation’ ahead of the April 2016 deadline.  To register online you’ll need your HMRC employer reference and Accounts Office (AO) reference.

 Alternatively, Jet Accountancy can submit your CIS return online on your behalf, contact us for more information.

In April 2016 the Government’s new National Living Wage will become law.

If you’re working and aged 25 or over and not in the first year of an apprenticeship, you’ll be legally entitled to at least £7.20 per hour. That’s an extra fifty pence per hour in your pocket. The Government is committed to increasing this every year.

If you’re an employer, you’ll need to make sure you’re paying your staff correctly from 1^st April 2016, as the National Living Wage will be enforced as strongly as the current National Minimum Wage.

Or remember, remember the 31^st of January!

31 January 2016 is the date by which you not only have to complete your self assessment tax return, if you are self-employed or have other income to declare, but it is also the date by which you have to pay any outstanding tax.

Don’t be burnt by penalties and let Jet Accountancy complete and file the return on your behalf, relieving you of this burden!

Contact us today on 07806 792211 or email us info@jetaccountancy.co.uk for a free no obligation quotation.

 

From 2015-16 onwards, the collection of Class 2 contributions will be through the self-assessment system. This means that Class 2 NICs can now be paid together with income tax and Class 4 NICs in one chunk on the 31 January following the end of the relevant tax year. In the past, most people have paid Class 2 contributions monthly by direct debit. Following the final payment in July 2015, HMRC have cancelled such direct debit payments, ready for the switch over to the new system of payment under self-assessment. However, those who wish to continue paying their contributions more regularly can set up a Budget Payment Plan (assuming they are up to date with their self-assessment payments) and make payments weekly or monthly by direct debit in advance of the payment deadlines.   For those who do not opt to use a Budget Payment Plan, the payment date for the 2015-16 liability (£145.60) will be due on 31 January 2017. Self-employed traders will need to budget for this lump sum payment accordingly.