September 2018

tax tips & finance e-newsletter

In this issue

Time to declare offshore income gains and assets warns HMRC
Check your pension savings annual allowance
Joint and several liability for unpaid VAT
GDPR - gaining consent to contact your customers
Using online communities to promote your business
Exam Success

Time to declare offshore income gains and assets warns HMRC

HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties.

New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK Income Tax, Capital Gains Tax, and Or Inheritance Tax.

Some UK taxpayers may not realise they have a requirement to declare their overseas financial interests. Under the rules, actions like renting out a property abroad, transferring income and assets from one country to another, or even renting out a UK property when living abroad, could mean taxpayers face a tax bill in the UK.

From 1 October more than 100 countries, including the UK, will be able to exchange data on financial accounts under the Common Reporting Standard (CRS). CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received or be faced with higher penalties.

The most common reasons for declaring offshore tax liabilities are in relation to foreign property, investment income and moving money into the UK from abroad. Over 17,000 people have already contacted HMRC to notify them about tax due from sources of foreign income, such as their holiday homes and overseas properties.

How do I notify HMRC?

Taxpayers can correct their tax liabilities by using HMRC’s digital disclosure service as part of the Worldwide Disclosure Facility.

Once the taxpayer has notified HMRC by 30 September of their intention to make a declaration, they will then have 90 days to make a full disclosure and pay any tax owed. We can assist you in making the necessary disclosure and tax calculation if these new rules apply to you.

Check your pension savings annual allowance

HMRC have updated their guidance on the rules for carrying forward the unused pension savings annual allowance, together with a calculator on their website.

For most taxpayers the maximum amount of pension savings that qualifies for tax relief each tax year is £40,000. It is possible to increase this amount by utilising unused relief brought forward from the previous 3 tax years, provided the individual was a member of a pension scheme that year.

The brought forward relief from the earliest year is utilised before later years. Thus for the current tax year 2018/19 the unused relief from 2015/16 may be utilised in addition to the current year relief, followed by 2016/17 and then 2017/18.

Tapered Pension Tax Relief for those with high income

For most taxpayers the maximum pension input annual allowance is currently £40,000, as mentioned above.

However, from 2016/17 those taxpayers with ‘adjusted income’ over £150,000 and ‘threshold income’ over £110,000 receive a tapered annual allowance. For those persons affected the allowance tapers by £1 for every £2 that their adjusted income exceeds £150,000 down to a minimum annual allowance of £10,000.

The calculations of ‘adjusted income’ and ‘threshold income’ are complicated and we can assist if you believe that this restriction applies. There are ways in which these figures can be reduced so as to minimise the effect of the restriction.

And you may have to pay tax if your pension savings are too high!

If your pension savings are more than your annual allowance for the tax year, and you do not have unused annual allowances from the 3 previous tax years to cover the difference, you’ll have to pay tax on the excess.

You’ll get a statement from your pension provider telling you if you go above the annual allowance. If you’re in more than one pension scheme, ask each pension provider for statements. This will help you work out how much you’ve gone above the allowance.

There is a calculator on the HMRC website but we can of course help you check that you have not exceeded the limits.

As you can see from the above, despite the “simplification” of pensions by George Osborne in 2015, the system is still extremely complicated and we are expecting yet further reforms in future Budgets. Nevertheless, saving in a pension is still very tax-efficient as for a higher rate taxpayer the net cost of saving £10,000 in a pension is currently £6,000.

Joint and several liability for unpaid VAT

Certain traders can be made liable for the unpaid VAT of another VAT-registered business when you buy or sell specified goods.

HMRC have recently updated VAT notice 726 which advises traders to carry out due diligence into their supply chain.

The specified goods are any equipment made or adapted for use as a telephone and any other equipment made or adapted for use in connection with telephones or telecommunication, such as SIM cards.

Also included is equipment made or adapted for use as a computer and any other equipment for use in connection with computers or computer systems and also other electronic equipment for use by individuals for the purposes of leisure, amusement or entertainment, such as Satnavs and games consoles.

GDPR - gaining consent to contact your customers

Under the recently introduced GDPR regulations, all businesses in the UK must have consent from their customers in order to keep their details on a database, contact them in future and so forth. So what does this mean and what do you need to do?

As far as the GDPR rules are concerned, consent means ‘offering individuals real choice and control. Genuine consent should put individuals in charge, build trust and engagement and enhance your reputation.’ The challenge for businesses is how to gain consent and maintain an effective contact database.

Building a contact database based on what, when and how consent was given, prevents individuals being bombarded with information they do not want and allows a business to feel confident that they are staying in line with the GDPR rules.

Gaining consent

You can gain consent when clients are asked to sign up to a newsletter or create an account; alternatively e-commerce businesses can use this method at the checkout.

For this opt-in to be sufficient under GDPR, individuals should be allowed to actively make the decision to have their data processed – i.e. tick the box that they are happy to have their data processed and kept on your database. You cannot have a pre-ticked option, which has to be deselected.

You can make the messaging more appealing by using language such as “yes, I would like to keep in touch and hear about new products, services and special offers.” This text can be added next to the tick box to opt in. 

 

Further action

End-users should always be given the option to go back to their consent declarations at any time for review, validation, to unsubscribe or to make any other changes, for example on the bottom of further correspondence emails, the option should always be given to opt out from previous consent. You can simply add an “unsubscribe” button to the bottom of emails to clients and contacts.

Ensuring you keep records of each user, who they are and when they consented is important to stay within the GDPR rules. If you are sure your customers have consented in line with the new regulations, then you have nothing to do. However, it is a good idea to audit your contact database and implement a re-permission campaign on a regular basis, perhaps every 6-12 months or so. 

If you ensure that your clients understand the benefits of staying connected, they will be less likely to unsubscribe.

Using online communities to promote your business

The beauty of online marketing is that it doesn’t have to be expensive. You can even use online groups / communities to help promote your business for free.

Online communities are groups of people who share advice, knowledge or stories related to a shared interest. They connect and share content on forums, on social media, or even on their own website or blog.

If you want to engage with an online community in order to promote your business, you need to do a little bit of research.

To begin with, think about your target audience. Who are they and why would they be interested in buying your product or service? For example, if you lease IT equipment to small and medium sized businesses (SMEs) then you might want to connect with business owners and business managers online.

Next identify a few potential online communities that you can engage with. In the above example, you could consider joining a small business owners group on LinkedIn or you could contribute to a business blog site.

In order to engage effectively with your new target audience, you need to avoid “selling” your product or service to them. Instead, you should contribute to the conversation and share useful articles, tips and advice. Using the above IT example, you could share tips for managing anti-virus and cyber security software systems or ideas on how to get the most battery life out of your laptop / tablet. The key at this stage is to promote awareness of your brand rather than to sell products.

In order to drive traffic (and potential new business) to your company website, include a link to the news section of your website at the bottom of each article / contribution that you make on your various online groups.

You could use wording such as, “click here to read more useful business tips and ideas.”

Finally, make sure you track the number of people who click through the link using a tool such as Google Analytics. You can use this data to understand which topics are of the most interest to your target audience and refine your future marketing content accordingly.

Exam Success

We are pleased to announce that Ben Packer has passed the final exam to achieve his Tax Technician Qualification and become a member of ATT, the leading professional body for those providing UK tax compliance services.

After joining Humphrey & Co as an Apprentice Accounting Technician in 2014 Ben went on to achieve his AAT qualification in 2016 and is currently starting the second year of his ACA studies to become a qualified Chartered Accountant.

We congratulate Ben on his hard work in achieving this qualification and wish him every success with his ACA studies.