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INCOME TAX |
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Trading income: Special trades See TM ¶2608 HMRC have announced that a new income tax relief will be introduced with effect from 6 April 2010. This will be similar to foster care relief and will apply to individuals who: » provide accommodation, care and support for up to three individuals who have been placed with them under a local authority shared lives scheme; and » share their home and family life with such individuals. The tax free allowances from the scheme will be available per household and will consist of £10,000 (a fixed amount) per tax year and a weekly allowance of £200 or £250 per placement for children aged under and over 11 years respectively. Income from land and property: Furnished holiday lettings See TM ¶2777 HMRC have confirmed that legislation to withdraw the special tax treatment of furnished holiday lettings will be enacted in 2010. This will have the effect of treating income from a furnished holiday let in the same way as income arising from other investment property. Earnings: Regular payments See TM ¶3032 HMRC have announced that a new bank payroll tax will apply from 9 December 2009 to 5 April 2010. The tax will affect all contractual and discretionary bonuses paid during this period to the extent that they exceed £25,000 and will apply to any employee whose activities are subject to the financial services regulations. There is, however, an exception to any contractual entitlement where the entitlement was in place prior to 9 December 2009 and the payer has no discretion as to the amount of the bonus due to the contractual obligation. The tax will be levied at the rate of 50% over the initial £25,000 and is due irrespective of the body or person who pays the bonus. Consequently, where a bonus is paid by a trust or another group company, bank payroll tax will still be due. In addition, the bank payroll tax will not be deductible for corporation tax purposes. Income tax and national insurance contributions, employer’s and employee’s will be due on the gross amount of the bonus.
Tax due is payable by 31 August 2010. Provision of meals and canteen facilities See TM ¶3206 HMRC have announced that, with effect from 6 April 2011, the provision of subsidised or free canteen food for workers will become a taxable benefit in circumstances where: » the availability of the canteen is linked to a salary sacrifice arrangement where the employee has given up their some of the gross salary in return for food and drink; or » there is a flexible benefits scheme in operation, so that the employee has chosen to give up some salary in return for food and drink. The luncheon voucher scheme is unaffected by these changes, as are arrangements where the employer provides a general subsidy for canteen food, to offer food at lower prices to all employees. Company cars See TM ¶3298 Changes to the company car tax rates which take effect from 6 April 2012 have been announced. The new rates will reduce the level at which car benefit is graduated, increasing the tax liability for company car benefit purposes. The 10% band will apply to company cars with CO2 emissions up to 99g/km. See TM ¶3300 With effect from 6 April 2010 the benefit charge applicable to electric cars provided as a benefit will be reduced to 0%. The reduced rate will apply for 5 years. Car fuel benefit See TM ¶3304 HMRC have announced that the figure on which the car fuel benefit is calculated will be increased from £16,900 to £18,000 with effect from 6 April 2010. Company vans See TM ¶3318 With effect from 6 April 2010 if an electric van is provided to an employee for his use, the amount of the taxable benefit is reduced to nil (from £3,000). A new definition of an electric van will be given in amended legislation, but it is anticipated that the definition will mean that the vehicle can only be propelled by electricity. The reduced rate will apply for 5 years. Van fuel benefit will rise to £550 from 6 April 2010. State benefits: Child tax credits See TM ¶3710 The following rates apply to child tax credits from 6 April 2010:
Working tax credits See TM ¶3720 The following rates apply to working tax credits from 6 April 2010:
State benefits and pensions: Retirement provision - high earners See TM ¶3777 HMRC have announced changes to the tax treatment of pension contributions. The threshold for restriction of tax relief is reduced to £130,000 (from £150,000). The reduction applies from 9 December 2009 for contributions in the tax year or for the two preceding tax years. Where the contribution exceed £20,000, the tax relief will be clawed back, however, the special annual allowance (£20,000) tax charge will only apply to additional pension savings over and above the individual’s normal regular pension saving and made after 9 December 2009. Pensions: Unregistered schemes See TM ¶3900 From 6 April 2010 where a lump sum, gratuity or other benefit is paid by an employer financed retirement benefit scheme, the recipient will be liable to tax at 50%. This is an increase from the current 40% rate applicable to such payments. Overseas issues: Seafarers See TM ¶4268 From 6 April 2011, the deduction available for UK seafarers will be extended to EU and European Economic Area residents who pay UK tax on their earnings as seafarers. Computation: Allowances See TM ¶4390 HMRC have announced that the tax allowances for 2010/11 will be the same as those for 2009/10. This is due to a negative retail price index and it has previously been announced that in such circumstances, allowances are frozen. Computation: Rates of tax See TM ¶4408 HMRC have announced that the income tax bands for 2010/11 will be the same as those for 2009/10. This is due to a negative retail price index and it has previously been announced that in such circumstances, bands and allowances are frozen. Administration: Penalties See TM ¶4544 If HMRC issue a determination after a taxpayer has failed to file a self-assessment return, the determination can only be replaced by the taxpayer filing a return within the time limits. Where no such return is filed, by concession in certain circumstances HMRC only collect the sum that would have been due for the relevant period had the taxpayer filed his or her return on time. This is known as “equitable liability” and is to be formalised by legislation.
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