SEPTEMBER TAX TIPS FROM CLARKE NICKLIN

Clarke Nicklin, financial experts in accounting, wealth planning and business advice, have issued their latest monthly tax tips, including Tax-Efficient Savings for Children; The Future for Intermediaries; When Tips are Taxable; Paying Inheritance Tax and September Key Tax Dates.

TAX EFFICIENT SAVINGS FOR CHILDREN

There are a number of ways to save or invest for children – some accounts are tax-efficient but rigid, others are often flexible but liable to tax. Interest earned from CTFs and Junior ISAs is paid tax-free, but the money is effectively locked in until the child is 18, at which time it belongs to the child. Standard savings accounts usually offer lower interest rates and the interest is likely to be taxable, but there will be flexibility on withdrawals and transfers, enabling the parent to keep a tight rein on the money. Read More

THE FUTURE FOR INTERMEDIARIES

The Summer Budget 2015 contained an announcement that the government is to consult on proposals to improve the effectiveness of the existing intermediaries’ legislation, commonly known as IR35. The reason for this review was given as the perceived unfairness that two people could be doing the same job and pay very different levels of tax depending on how they are engaged. A consultation document has now been published (Intermediaries Legislation (IR35): discussion document), which sets out the rationale for change, the options to be discussed and the likely next steps. Because of the interaction between allowances available and rates paid in the corporate and personal tax systems, and the absence of NICs on investment income Read More

WHEN TIPS ARE TAXABLE

Confusion often arises regarding tips and gratuities as the tax and NIC treatment depends on how they are paid to the recipient.

Cash tips handed to an employee, or left on the table at a restaurant and retained by that employee, are not subject to tax and NICs under PAYE, but the employee will need to declare the income to HMRC – HMRC often make an adjustment to the employee’s PAYE tax code number to reflect the amount likely to be received during a tax year so any liability is collected via the payroll. By contrast, if an employer passes tips to employees that are either handed to him (or the employees) or left in a common box/plate by customers, the employer must operate PAYE on all payments made. Read More

PAYING INHERITANCE TAX

Various rules exist for determining the time for payment of inheritance tax (IHT). In certain circumstances it will be possible to pay in instalments, and it is even possible to settle a liability by transferring ownership of assets to the Crown (for example, a valuable painting may be donated to a national museum in lieu of an inheritance tax bill).

Unless it can be paid in instalments, IHT is generally due for payment as follows: – Chargeable lifetime transfers: Tax is due six months after the end of the month of the transfer. But if the transfer is made between 6 April and 1 October in any year, the tax is due at the end of April the following year.
– Estates: The personal representatives must pay the tax at the time that the IHT account is sent to HMRC, and this depends on the length of time it takes to sort out the estate.
– PETs: Tax due on a potentially exempt transfer (PET) that becomes chargeable because of the transferor’s death within seven years needs to be paid six months after the end of the month in which the death occurs. Read More

SEPTEMBER TAX DATES

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/9/2015

30 – Closing date to claim Small Business Rate Relief for 2014/15 in England

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