From the tax year 2011, those people whose income is £150,000 or more will receive reduced tax relief on their personal pension contributions. But instead of a ‘Cliff Edge’ the reduction in tax relief will be on a sliding scale, so those who earn £180,000 or more will receive only 20% tax relief. People whose income is between £150,000 and £180,000 will receive tax relief of between 50% and 20%. We believe their tax relief will be reduced by 1% for each £1,000 of income above £150,000.
HMRC wants to introduce equality between those who personally pay contributions and those whose employers pay sizeable contributions. Therefore, it will also apply the restriction on tax relief for the highest earnings to employer contributions. As employees aren’t currently taxed on these contributions, the new rule could introduce an additional tax charge on employees.
These changes will become effective in April 2011.Schemes in future will have to let people know the value of their total contribution arrangements, this is straightforward. But for defined benefit schemes, the process of valuing the total contribution could be complicated. HMRC intends to consult with the industry over the next year on the best way of doing this.
It’s important to emphasise that pensions will remain a highly tax-efficient way of saving for the majority of people, and that these changes will only affect a small number of people. But the combination of these two tax changes will significantly reduce the appeal of pensions for the very highest earners in the UK.
These changes will prompt high earners to explore alternatives to pensions and will create a need for more sophisticated and bespoke financial planning. The time for looking at alternatives is now so if you would like an initial chat then please do not hesitate to contact Mohit Saini of ERC Financial Planning Ltd on 0151-227-4792.
Chartered Accountants Liverpool and Chartered Accountants Chester
HMRC & The Pre Budget Report
We have finally received word from the government as to the date for the pre budget report and we all wait with baited breath as to what gems Darling dreams up for us and the rest of the business world to deal with over the coming months. We are all aware that the treasury is finding money hard to come by, unless of course you happen to be a high street bank, so we expect tax to be increased across the board either by stealth or full disclosure. With an election due early next year it would seem logical that the current tenants may not wish to rock the boat too much but would this then be seen as weakness in dealing with the current economic position?…Only time will tell.
Needless to say our website will be updated for all adjustments in rates etc within a few hours of Alasdair Darling’s speech. We will forward the salient points on email as usual so watch this space.
As I’m sure we are all aware, HMRC is particularly aggressive in its attempts to collect tax liabilities currently for all the obvious reasons. However they seem to have the complete opposite approach to tax refunds due. Claims are taking anything between 6 -12 months to resolve in certain cases; phone calls and enquiries into refunds are taking over 30 days to be returned and our clients are frustrated to say the least.
The charter whereby letters and enquiries receive a response within 14 days seems to have been shelved. By contrast HMRC are dealing with the missed deadlines of taxpayers within days and issuing threats of distraint etc within weeks….this smacks of desperation and leaves the honest taxpayer feeling that there is one rule for one, and a whole different set for another. If anyone is suffering from a lack of response from HMRC within a reasonable timescale then we are suggesting that official complaints are made in writing to HMRC and even letters written to their local MP in attempt to receive a reasonable level of service.
Rant over for now but watch this space for the government’s hand reaching ever deeper into the taxpayer’s pocket on December 9th!!
Chartered Accountants Liverpool and Chartered Accountants Chester
Needless to say our website will be updated for all adjustments in rates etc within a few hours of Alasdair Darling’s speech. We will forward the salient points on email as usual so watch this space.
As I’m sure we are all aware, HMRC is particularly aggressive in its attempts to collect tax liabilities currently for all the obvious reasons. However they seem to have the complete opposite approach to tax refunds due. Claims are taking anything between 6 -12 months to resolve in certain cases; phone calls and enquiries into refunds are taking over 30 days to be returned and our clients are frustrated to say the least.
The charter whereby letters and enquiries receive a response within 14 days seems to have been shelved. By contrast HMRC are dealing with the missed deadlines of taxpayers within days and issuing threats of distraint etc within weeks….this smacks of desperation and leaves the honest taxpayer feeling that there is one rule for one, and a whole different set for another. If anyone is suffering from a lack of response from HMRC within a reasonable timescale then we are suggesting that official complaints are made in writing to HMRC and even letters written to their local MP in attempt to receive a reasonable level of service.
Rant over for now but watch this space for the government’s hand reaching ever deeper into the taxpayer’s pocket on December 9th!!
Chartered Accountants Liverpool and Chartered Accountants Chester
UK accountants plan for growth
British businesses are preparing for growth despite believing the impact of the recession could last until 2011, the Institute of Chartered Accountants in England and Wales (ICAEW) said.
A survey by the institute suggested that companies are planning for revenue growth over the next few years, albeit at a slower pace than in previous years.
Two-thirds of respondents said they intended to increase turnover over the next two years, compared with 84pc of respondents in 2008. Over half of companies - 54pc - said the UK regulatory and tax environment was not business friendly.
"As the economy begins to recover, businesses are focusing on longer-term competitiveness issues. The Government should follow this lead," said Michael Izza, chief executive of the ICAEW.
"Companies more than ever need a supportive business environment. As well as less regulatory and taxation legislation, there needs to be proper consultations on any proposed changes and enough time and support for businesses to get to grips with it all," he added.
A third said the effects of the recession had been very negative, up from 20pc in 2008 when the scale of the downturn was not fully known. Only 15pc said their business had been unaffected by the crisis. The sharpest increase in how badly the effects of the recession were being felt now compared with last year was among businesses with up to nine employees.
The volatility in financial markets and changes in consumer demand had had the most significant impact on business in 2009, according to the survey.
Source: www.telegraph.co.uk
HMRC to waive fines for postal strike victims
The sound of 85,000 temps stampeding towards 30,000 roles at the Royal Mail suggests that the disruption to the postal service on Thursday and Friday is on most people’s radar.
However in a rare display of leniency, HM Revenue & Customs (HMRC) said it was gearing up to waive fines for self-assessment tax forms filed late due to the postal strike.
Anyone who can prove they posted their tax return for 2008-09 in good time but still missed the deadline as a result of the strike will be able to successfully appeal their £100 penalty.
Usually the Revenue is only sympathetic to self-assessment taxpayers, who must make their return by 31st October, if their return is late due to unforeseeable circumstances.
But HMRC now says “circumstances of the [postal] strike” that cause returns to miss the deadline will almost certainly be exempt from paying a penalty, the Daily Telegraph reported.
The move has been welcomed by accountants, yet one chartered firm told the paper that it foresees taxpayers ‘trying their luck’ by using the postal strike as an excuse to file late.
Grant Thornton also said taxpayers genuinely affected by the strike may have to devote hours to prove they filed in good time, particularly if they don’t obtain a “proof of posting” certificate from their post office.
Positively for advisors, the potential for disruption to the postal service lends new credit to their age-old advice about filing self-assessment returns : ‘don’t leave it to the last.’
The Institute of Chartered Accountants in England Wales said: “There is a tradition for some to put off doing their tax return until the bitter end, but this will only cause more stress than is necessary.
“Also, with the threat of a postal strike it is a good idea to aim to get your paper return in ahead of time so you won’t risk the £100 penalty.”
Although not practical for everyone, taxpayers can also boost their chance of HMRC not thinking that they are feigning being a strike victim by also personally obtaining a receipt from their local tax office.
Source: www.contractoruk.com
Chartered Accountants & Business Advisors
However in a rare display of leniency, HM Revenue & Customs (HMRC) said it was gearing up to waive fines for self-assessment tax forms filed late due to the postal strike.
Anyone who can prove they posted their tax return for 2008-09 in good time but still missed the deadline as a result of the strike will be able to successfully appeal their £100 penalty.
Usually the Revenue is only sympathetic to self-assessment taxpayers, who must make their return by 31st October, if their return is late due to unforeseeable circumstances.
But HMRC now says “circumstances of the [postal] strike” that cause returns to miss the deadline will almost certainly be exempt from paying a penalty, the Daily Telegraph reported.
The move has been welcomed by accountants, yet one chartered firm told the paper that it foresees taxpayers ‘trying their luck’ by using the postal strike as an excuse to file late.
Grant Thornton also said taxpayers genuinely affected by the strike may have to devote hours to prove they filed in good time, particularly if they don’t obtain a “proof of posting” certificate from their post office.
Positively for advisors, the potential for disruption to the postal service lends new credit to their age-old advice about filing self-assessment returns : ‘don’t leave it to the last.’
The Institute of Chartered Accountants in England Wales said: “There is a tradition for some to put off doing their tax return until the bitter end, but this will only cause more stress than is necessary.
“Also, with the threat of a postal strike it is a good idea to aim to get your paper return in ahead of time so you won’t risk the £100 penalty.”
Although not practical for everyone, taxpayers can also boost their chance of HMRC not thinking that they are feigning being a strike victim by also personally obtaining a receipt from their local tax office.
Source: www.contractoruk.com
Chartered Accountants & Business Advisors
Fake Tax Refund Email Scam
A word of warning to everyone out there.
Sadly as part of the modern world we have to live with an increasing amount of e-mail spam. Recently, there has been a spate of spam e-mails claiming to be from HMRC. They appear tempting because they are offering you a tax refund. BE WARNED - THEY ARE A SCAM.
HMRC have announced that they do not notify customers of a tax rebate via e-mail, nor invite taxpayers to complete an online form with their bank details to receive a tax refund.
There are some more details if you follow this link to the HMRC website http://www.hmrc.gov.uk/security/examples.htm.
Chartered Accountants & Business Advisers
Sadly as part of the modern world we have to live with an increasing amount of e-mail spam. Recently, there has been a spate of spam e-mails claiming to be from HMRC. They appear tempting because they are offering you a tax refund. BE WARNED - THEY ARE A SCAM.
HMRC have announced that they do not notify customers of a tax rebate via e-mail, nor invite taxpayers to complete an online form with their bank details to receive a tax refund.
There are some more details if you follow this link to the HMRC website http://www.hmrc.gov.uk/security/examples.htm.
Chartered Accountants & Business Advisers
Businesses Lax About Identity Fraud
Firms are not paying sufficient attention to safeguarding information they hold on their customers, it has been claimed.
Research carried out for National Identity Fraud Prevention Week found that one in three employees bin rather than shred sensitive documents relating to customers.
The same study revealed that three-quarters of staff believed that their employers could do more to implement measures that would limit the risks of important personal information falling into the hands of fraudsters.
Of the 1,000 employees polled in the study, 36 per cent said they did not know or were unsure whether their firm or organisation had a policy in place covering the handling of documents that contained personal or sensitive information.
Tyron Hill, a spokesman for National Identity Fraud Prevention Week, commented: “Today’s customers are more vigilant and informed when making decisions – businesses that are seen to do more to protect data are at a competitive advantage over those that aren’t.”
It is thought that identity fraud in the UK totals some £1.2 billion.
A guide has been published to help businesses prevent fraud and protect themselves from falling victim to it. The guide is available on our website at our news desk section.
Chartered Accountants & Business Advisers
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