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Tax News & Tips for August 2016

Welcome to our August news report designed to bring you the latest tax news and tips so you should know what lies in store and be a step ahead of the taxman.

    Here are the main highlights for August 2016:

  • The annual HMRC report was published
  • HMRC published a Spotlight on Tax Avoidance Schemes
  • HMRC focuses on the Contractor Loan Schemes
  • Tips on hiring casual employees for the summer
  • Upcoming Key Tax Dates in August

HMRC Annual Report

A report on the accounts of the HMRC for 2015/16 was published by The National Audit Office indicating that HMRC has raised its tax revenues in 2015/16 by £19.1 billion to a total of £536.8 billion, which is an increase of 3.7% on 2014/15. £40 billion were paid as credits and benefits which is approximately 1/5 of the total benefit expenditure of the government. What contributed most to this outcome are income tax and National Insurance Contributions, which indicate a total increase of £10.3 billion (3.8%) on 2014/15. Corporation tax has also increased by 9.9%(£4.1 billion) and VAT increased by 1.8% (£2.1 billion). A significant increase in Capital Gains (CGT) and Insurance Premium Tax was recorded as well, correspondingly by 28.1% to £7.3 billion and by 27.6% to £3.7 billion.

Read the complete HMRC report summary here

A Spotlight on Tax Avoidance Schemes

HMRC published “Spotlight 31: change of date for withdrawal of transitional relief on investment growth” which is extending the date from the 30th of November 2016to the 31st of March 2017.

This is a part of the package of changes aiming to tackle the usage of concealed remuneration avoidance schemes like Employee Benefits Trusts or contractor loans in order to make sure that anyone using these schemes pays the precise amounts of tax and National Insurance Contributions (NIC).

Read more here.

HMRC focuses on the Contractor Loan Schemes

Contractor Loan Schemes were aggressively marketed by scheme promoters as an option to gain non-taxable income. HMRC published a new guide on Contractor Loan Schemes which strictly outlines that such schemes are inapplicable and anyone who uses them is likely to be challenged by the taxman.

Typically in the contractor loan scheme the individual is being paid in the form of a loan by a company or trust, commonly known as a remuneration trust. Such payments are not made directly by the engaged company but are being diverted through a chain of other companies, partnerships or trusts. The scheme promoters claim that these payments are not taxable because they are only loans but since the loan has not been paid back such payments should be treated as normal taxable income. Anyone using these schemes is likely to be considered by HMRC as practicing in arrangements for tax avoidance, which may result in penalties.

Read more…

Tips on hiring casual employees for the summer

Probably many employers are thinking about hiring extra staff in order to cover the busy summer period. There are several issues that need to be considered when taking on temporary employees.

It’s most important to consider the employment status of such workers carefully because the term “casual worker” is not defined in statute quite precisely. It’s often referred to people who are engaged only when needed and who doesn’t have employment status and the associated legal rights, unlike the permanent employees.

Use HMRC’s Employment Status Indicator in order to check the status of individual temporary workers or groups and see how should they be treated for tax and National Insurance Contributions.

Upcoming Key Tax Dates in August

02.08.2016

This is the last day for car change notifications in the quarter finishing on the 5thof July. The form P46 Carneeds to be used for this purpose.

19 – 22.08.2016

PAYE/NIC, CIS and student loan deductions due for month to the 5th of August 2016.

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