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Accounting News Report – September 2016

Welcome to our September news report designed to update you on some of the latest accounting & tax issues.

Here is a summary of the topics included:

  • Dividend Allowance
  • CIOT is examining new corporate offence proposals
  • Proposal for amendment of Finance Bill 2016 on OTS appointments
  • Consultations with the EU on ending VAT on eBooks
  • Upcoming Key Tax Dates in October

Dividend Allowance

The new 0% rate for dividend income was implemented by the legislation included in Finance Bill 2016, which also changed the tax rates for dividend income. The changes came in effect on the 6th of April 2016. In short, the new nil rates apply to the first £5,000 of your dividend income and is available annually. Starting from the 6th of April 2016 UK residents now pay tax on any dividends received over the allowance of £5,000 in accordance to the below rates:

  • 7.5% on the dividend income being received within the basic rate band;
  • 32.5% on the dividend income being received within the higher rate band
  • 38.1% on the dividend income being received within the additional rate band.

Dividends from shares held in an Individual Savings Account (ISA) will remain tax free.

Individuals receiving dividend income who are falling into the self-assessment regime for the 1st time are required to notify HMRC accordingly. The Self-Assessment returns for the tax year 2016-17 must be submitted by the 31st of January 2018.

CIOT is examining new corporate offence proposals

There were recent concerns coming from The Chartered Institute of Taxation (CIOT)about the new corporate offence of failure to impede the criminal tax evasion facilitation may cause a string of prosecutions in comparatively small cases where civil penalties may already provide sufficient punishment.

The Institute outlined its concerns in a response to a HMRC consultation on the new corporate criminal offence, aiming to overcome the obstacles in attributing criminal liability to companies and corporations for the criminal acts of those acting on their behalf.

HMRC’s intends to stick to their original implementation timetable in order to introduce the legislation to Parliament in the autumn, with Royal Assent expected in the beginning of 2017.

Considering the uncertainty that the EU Referendum decision has caused (and will continue to cause for quite some time) to business, the CIOT has requested form HMRC to consider delaying the implementation of this measure.

Proposal for amendment of Finance Bill 2016 on OTS appointments

The chairman of the Treasury Select Committee recently wrote to the Chancellor of the Exchequer, to notify him that the Committee does not agree with the decision his predecessor’s not to accept a recommendation that the Committee be given the right to put a veto over the appointment or dismissal of the Office for Tax Simplification’s (OTS) Chair and Tax Director.

According to the committee the OTS needs to be able to provide the Government with straightforward, impartial and high-quality advice in order to be successful, which can only be perfected if those entrusted with providing it are independent, and seen as such. This issue stands separately of the breadth of their scope for making recommendations and is clearly outlined in the Finance Bill provisions which place the OTS on a statutory footing.

An amendment the Finance Bill has been proposed in order to give statutory effect to this recommendation.

Consultations with the EU on ending VAT on eBooks

The future of the chargeable VAT rate on digital publications or eBooks is being reviewed as the European Commission (EC) has launched a 2-month consultation with a view to abolish the current full VAT rate.

Currently Member States have an option to tax newspapers, publications or printed books at a decreased rate (5% min) and some Member States were also granted the applications of VAT rates below 5% (known as super-reduced rates) which include exemptions with a deductions right of VAT at the preceding stage (known as zero rates) to specific printed publications. Digital publications that are supplied electronicallyneed to be taxed at the regular VAT rate.

Upcoming Key Tax Dates in October

1st – Due date for Corporation Tax payment for accounting periods ended 31 December 2015.

5th -In case a Tax Return hasn’t been received, individuals and trustees are require.ed notify HMRC about newincome sources and chargeability in 2015/16

14th – Return and payment of CT61 tax payable for quarter to 30 September 2016.

19th – Tax and Class 1B national insurance(NI)payable on PAYE settlements for 2015/16.

19th /22nd – PAYE/NIC, CIS and student loan deductions payable for month to 5 October 2016 or for the secondquarter of 2016/17 for small employers.

31st – Deadline for submission of 2015/16 self-assessmenttax returns in paper to HMRC. You still have time until January 31st to submit the return electronically. If you’re filing a paper return this is also the deadline for collection of underpaid tax by adjustment to your 2017/18 PAYE code (applies to underpayments of up to £3000 only).

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