October 2016

tax tips & finance e-newsletter

In this issue

In this issue we look at concerns over EU worker status following Brexit and the updated company car advisory fuel rates. Your Money looks at the new tax free childcare scheme. Finally in our Retirement planning, wills & inheritance tax section we discuss gift giving strategies as part of Inheritance Tax planning.

Tax Investigations Service

We are aware that £800 million has been allocated by the Government to target tax evasion.

Many tax investigations are triggered at random, and even if you have done nothing wrong you are still at risk of an enquiry which can take many months, absorb your valuable time and rapidly rack up accountancy fees.

For a number of years we have offered a Tax Investigations Service which protects our clients from the cost of our fees in assisting in the event of an H M Revenue and Customs (HMRC) visit or questions they may ask about your personal, or business tax affairs.

This protection costs less than you may think, the fee being dependent on the type of cover you require.

Included within the annual fee is access to a Client Legal Helpline open 24 hours a day, 365 days a year.

This helpline deals with common legal issues such as:

  • Health & Safety
  • Employment & Personnel
  • Commercial Legal Matters

The scheme’s renewal date is 1 December. For those clients who take up the service before this date we will offer protection free until the beginning of December, all you will need to do is sign a direct debit mandate to cover the annual premium, payable in December.

If you require further information,
please contact Anthony Smith.

Brexit

Concerns over EU worker status following Brexit

Brexit - EU referendum

EU employees are concerned about their residency status following the EU referendum.

A survey of 800 companies who employ EU workers found that 41% of businesses say their EU staff are worried.

Further findings:

  • 5% have seen members of staff resign;
  • 10% have seen their employees express an intention to leave the UK as a result of the vote.

Working in the UK

Until article 50 is invoked and Brexit is formally initiated, it is not clear what changes to residency there will be. Until then, if your business is hiring workers from abroad (from the EU or elsewhere) you must check their legal right to work in the UK.

There is a tool on the government website that helps employers check and lets you know which documents to ask for www.gov.uk/legal-right-work-uk

Workers from abroad won’t have a P45 so you need to get the following information:

  • Name
  • Gender
  • Date of birth
  • Address
  • National insurance number

Your Money

The government’s tax-free childcare scheme is due to launch in early 2017.

As part of the scheme, parents will be able to set up an online account with HMRC to pay for childcare with a registered provider.

The government will top up the account by 20% up to a total of £10,000 per annum. The maximum government payment is £2,000 per child up to age 12, per year (or £4,000 for children with disabilities up to age 17).

To be eligible, each parent needs to be in work earning a minimum of £115 a week and have an annual income of less than £100,000.

New company car advisory fuel rates from 1 September 2016

HMRC has published the company car mileage rates effective from 1 September 2016, which can be used by employers paying employees a business mileage when driving an employer provided car. These rates can also be used when charging employees for fuel provided for private miles and ordinary commuting.

 Engine size
 1400cc or less1401-2000cc1600cc or less1601-2000ccOver 2000cc
Petrol (Per mile)11p (Previously 10p)13p (Previously 12p)--20p (Previously 19p)
LPG (Per mile)7p (Previously 7p)9p (Previously 7p)--13p (Previously 13p)
Diesel (Per mile) - -9p (Previously 8p) 11p (Previously 10p)13p (Previously 11p)

These rates apply to all journeys on or after 1 September 2016 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose.

Retirement planning, wills & inheritance tax

Gifts & inheritance tax

Although leaving an inheritance has traditionally been a key part of estate planning, attitudes are changing. People are choosing instead to financially support their loved ones while they are alive.

A careful gift-giving strategy can help minimise your liability to Inheritance Tax (IHT) and ensure that you leave as much of your estate as possible to your loved ones.

Gifts which are exempt from IHT are:

  • Annual exemption - You can give away up to £3,000 in gifts each tax year. Any remaining annual exemption can be carried over to the next tax year making the maximum annual exemption £6,000.
  • Wedding and civil partnership gifts - depending on your relationship to the bride or groom you can give £5,000 to your child, £2,500 to a grandchild or great-grandchild or £1,000 to anyone else.
  • Small gifts - You can give as many people as you like gifts of up to £250 a year. However it cannot be set against a gift of more than £250 and you cannot give a person £250 if you’ve already given them a gift using another exemption.
  • Regular gifts from income - Gifts from income are exempt from IHT provided that the gift giver can maintain their normal lifestyle.
  • Help with living costs - There is no IHT due on gifts that go towards helping certain people with living costs.
  • Political parties - Gifts to political parties with either 2 MPs, or 1 MP and at least 150,000 votes in a general election are also free from IHT

Most lifetime gifts are free from IHT if the giver lives for 7 years after making the transfer. However gifts into trusts may give rise to lifetime IHT.

If you require further information in connection with Inheritance Tax Planning please speak to one of our Trust and Estate Support Services team on 01273 775814

MONEY FACTS

Current bank rate:

0.25%

Current inflation: 

0.6%
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