27
Jun, 2024

How to check a UK VAT number

The online service for checking a UK VAT number is available at: www.gov.uk/check-uk-vat-number.

This service can be used to check:

  • if a UK VAT registration number is valid; and
  • the name and address of the business the number is registered to.

The service also allows UK taxpayers to obtain a certificate to prove that they checked that a VAT registration number was valid at a given time and date. This is especially important when you take on new suppliers as if the VAT number is invalid, HMRC could withdraw your ability to reclaim the VAT input VAT you have paid. The certificate will also provide valuable evidence to prove that the trader acted in good faith, should HMRC challenge input tax recovery or seek payment of lost VAT.

The European Commission website also includes an on-line service which allows taxpayers to check if a quoted VAT number from anywhere in the EU or Northern Ireland is valid. The on-line service is available at: https://ec.europa.eu/taxation_customs/vies/#/vat-validation

Source:HM Revenue & Customs | 23-06-2024
27
Jun, 2024

Check employment status for tax

The Check Employment Status for Tax (CEST) tool can be used to help ascertain if a worker should be classified as employed or self-employed for tax purposes in both the private and public sectors.

The service provides HMRC’s view as to whether IR35 legislation applies to a particular engagement and whether a worker should pay tax through PAYE. Additionally, the service will help to determine if off-payroll working in the public sector rules apply to a public sector engagement.

The software can be used to check the employment status of:

  • a worker providing services;
  • a person or organisation hiring a worker; or
  • an agency placing a worker.

HMRC has said that it will stand by the result given unless a compliance check finds the information provided was not accurate. HMRC will not stand by the results of contrived arrangements, and one designed to create a particular outcome from the service. HMRC are clear that this would be treated as evidence of deliberate non-compliance and could result in higher penalties.

The service is anonymous, and the results are not stored online. However, the results can be printed and held for your own records. If any changes take place to the worker's role their status should be reassessed.

Source:HM Revenue & Customs | 23-06-2024
27
Jun, 2024

Finding your National Insurance number

If you have lost or forgotten your National Insurance number there are a number of ways to locate it. Firstly, you could try and locate the number on paperwork such as your tax return, payslip or P60. You can also use your personal tax account or the HMRC App to find your National Insurance number.

If your National Insurance number still cannot be found a request can be submitted in writing to HMRC using form CA5403 or by telephone. HMRC will not disclose your number over the telephone and will instead send the details by post to the address HMRC has for you on file. The details should arrive within 15 days.

Teenagers should automatically be sent a letter just before their 16th birthday detailing their National Insurance number. These letters should be kept in a safe place. The previously issued plastic National Insurance cards are no longer available.

The National Insurance number helpline can help those aged between 16 and 20 who have not received a letter with details of their National Insurance number as well as other new applicants.

An individual must have the right to work or study in the UK in order to apply for a National Insurance number.

Source:HM Revenue & Customs | 23-06-2024
27
Jun, 2024

Check your State Pension forecast

The enhanced Check Your State Pension forecast service is now available online. The service can be found on GOV.UK at the following webpage https://www.gov.uk/check-state-pension.

The new digital service is a joint service by HM Revenue and Customs (HMRC) and the Department for Work and Pensions (DWP). It has been enhanced to include a fully end-to-end digital solution.

The service allows most people under State Pension age to view their pension forecast and identify any gaps in their National Insurance Contributions (NICs) record. This will be helpful for taxpayers looking to make voluntary NIC contributions to increase their entitlement to benefits, including the State or New State Pension.

Usually, HMRC allow you to pay voluntary contributions for the past 6 tax years. The deadline is 5 April each year. However, there is currently an opportunity for people to make up gaps in their NICs for the tax years from April 2006 to April 2017 as part of transitional measures to the new State Pension. The deadline has been extended a number of times and has been most recently extended until 5 April 2025.

The launch of HMRC’s online service will help speed up this process. HMRC’s helplines have been struggling to meet the demands for information and processing claims to pay additional NIC contributions.

HMRC has also confirmed that all relevant voluntary NIC payments will be accepted at the rates applicable in 2022-23 until 5 April 2025.

It is worthwhile checking your State Pension position on a regular basis, this will help to optimise your entitlement. You should also consider what other savings or pensions might be required for a long and comfortable retirement.

Source:HM Government | 23-06-2024
27
Jun, 2024

Are you claiming the marriage allowance

The marriage allowance can be claimed by married couples and those in a civil partnership and where a spouse or civil partner does not pay tax or does not pay tax above the basic rate threshold for Income Tax (i.e., one of the couples must currently earn less than the £12,570 personal allowance for 2024-25).

The allowance works by permitting the lower earning partner to transfer up to £1,260 of their personal tax-free allowance to their spouse or civil partner. The marriage allowance can only be used when the recipient of the transfer (the higher earning partner) does not pay more than the basic 20% rate of income tax. This would usually mean that their income is between £12,571 and £50,270 during 2024-25. For those living in Scotland this would usually mean income between £12,571 and £43,662.

Using the allowance the lower earning partner can transfer up to £1,260 of their unused personal tax-free allowance to a spouse or civil partner. This could result in a saving of up to £252 for the recipient (20% of £1,260), or £21 a month for the current tax year.

If you meet the eligibility requirements and have not yet claimed the allowance you can backdate your claim as far back as 6 April 2020. This could result in a total tax break of up to £1,260 if you can claim for 2020-21, 2021-22, 2022-23, 2023-24 as well as the current 2024-25 tax year.

HMRC’s online Marriage Allowance calculator can be used by couples to find out if they are eligible for the relief. An application can then be made online at GOV.UK.

Source:HM Revenue & Customs | 23-06-2024
25
Jun, 2024

What is a group company structure?

A group is formed when one company has control of, owns, a number of subsidiary companies.

A group is different to an arrangement where an individual owns a number of companies personally. In this case the companies would be called associated or sister companies.

What are the advantages of a group structure?

One useful reason for setting up new ventures as a separate subsidiary is the mitigation of commercial risk. This would ensure that existing trading assets of the rest of the group are protected from any liabilities that may arise in relation to the new venture.

Assets can usually be transferred between group companies at their book value rather than market value. In most cases this would mitigate against any gains being taxed at the point of transfer.

Tax advantages

As long as the group is formed effectively, tax losses and other reliefs can be used across the group.

As noted above transfers of assets can be made between group companies without triggering capital gains tax charges.

In most cases, dividends paid between group members are not taxable as they are a distribution of taxed profits.

Setting up a group structure

Planning to create a group structure can be a complex exercise and there will be costs in making sure that the structure adopted protects existing trades and assets.

If you are interested in discussing the advisability of setting up a group arrangement for your present or future trading activities, please call so we can flesh out your options.

Source:Other | 23-06-2024
20
Jun, 2024

Is your income over £100,000?

If you earn over £100,000 in any tax year your personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This means that any taxable receipt that takes your income over £100,000 will result in a reduction in personal tax allowances that would reduce the allowance to zero if your adjusted net income is £125,140 or above.

Your adjusted net income is your total taxable income before any personal allowances, less certain tax reliefs such as trading losses, certain charitable donations and pension contributions.

For the current tax year, if your adjusted net income is likely to fall between £100,000 and £125,140 you would pay an effective marginal rate of tax of 60% as your £12,570 tax-free personal allowance is gradually withdrawn.

If your income sits within this band you should consider if there are any planning opportunities to avoid this personal allowance trap by reducing your income below to £100,000. This can include giving gifts to charity, increasing pension contributions and participating in certain investment schemes.

A higher rate or additional rate taxpayer who wanted to reduce their tax bill could make a gift to charity in the current tax year and then elect to carry back the contribution to 2023-24. A request to carry back the donation must be made before or at the same time as the 2023-24 self-assessment return is completed i.e., by 31 January 2025.

Source:HM Revenue & Customs | 17-06-2024
20
Jun, 2024

Connected persons for tax purposes

The definition of a connected person for tax purposes varies.

A statutory definition of “connected persons” for Capital Gains Tax purposes is set out in Section 286 of the Taxation of Chargeable Gains Act (TCGA) 1992.

The legislation states:

" A person is connected with an individual if that person is the individual’s spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the individual or of the individual’s spouse or civil partner"

In this context, ‘relative’ means brother, sister, ancestor or lineal descendant and spouses or civil partners of relatives. The term 'relative' does not cover all family relationships. In particular, it does not include nephews, nieces, uncles and aunts.

HMRC’s internal guidance on this definition also states that persons excluded are the widows or widowers, or surviving civil partners, of deceased persons, or relatives of a deceased spouse or of a deceased civil partner unless connection can be established by a route not involving the deceased. A dissolution of a civil partnership or a divorce can similarly lead to persons in addition to the former civil partner or spouse ceasing to be connected with the individual.

Source:HM Revenue & Customs | 17-06-2024
20
Jun, 2024

Tax and employee share schemes

There are a number of government approved share schemes which offer various incentives to employees. The rules of the schemes vary but they are all designed to help incentivise employees by giving them the opportunity to invest in their employer's business. This in turn helps businesses retain and recruit key staff by offering tax efficient benefits.

They can be tax advantaged or non-tax advantaged. The tax approved schemes are Share Incentive Plans (SIPs), Save As You Earn (SAYE) schemes, Company Share Option Plans (CSOPs) and Enterprise Management Incentive (EMI) schemes. You can also qualify for tax advantages if you are an employee shareholder.

Some employers offer employee share schemes which are not approved by the government. The purchase of shares in unapproved share schemes are subject to the usual tax rules. These schemes are called non-tax advantaged share schemes, which can be:

  • ‘acquisition schemes’, which give an employee free or discounted shares; or
  • ‘share option schemes’, where an employee can buy shares.

Employees may also receive dividends if they own shares. These are taxed in line with the usual rules.

Source:HM Revenue & Customs | 17-06-2024
20
Jun, 2024

Tax relief for training costs

If you are self-employed it is important to know if an expense is tax allowable. Any allowable costs can be used to reduce your taxable profit.

As a general rule you can claim for items that you would normally use for less than 2 years as allowable expenses such as stationery and other office sundries as well as rent, rates, power and insurance costs.

HMRC lists the following office expenses as being allowable:

  • office costs, for example stationery or phone bills
  • travel costs, for example fuel, parking, train or bus fares
  • clothing expenses, for example uniforms
  • staff costs, for example salaries or subcontractor costs
  • things you buy to sell on, for example stock or raw materials
  • financial costs, for example insurance or bank charges
  • costs of your business premises, for example heating, lighting, business rates
  • advertising or marketing, for example website costs
  • training courses related to your business, for example refresher courses

Regarding training costs, you can claim training costs that help you:

  • improve skills and knowledge you currently use for your business;
  • keep up-to-date with technology used in your industry; 
  • develop new skills and knowledge related to changes in your industry; or
  • develop new skills and knowledge to support your business – this includes administrative skills.

You cannot claim for training courses that help you:

  • start a new business; or
  • expand into new areas of business that are not related to your current business activities.
Source:HM Revenue & Customs | 17-06-2024