If you have taxable income of less than £17,570 in 2024-25 you will have no tax to pay on interest received. This figure is calculated by adding the £5,000 starting rate limit for savings (where 0% of the interest is taxable) to the current £12,570 personal allowance. In addition, there is a Personal Savings Allowance (PSA). This allowance ensures that for basic-rate taxpayers the first £1,000 interest on savings income is tax-free (effectively allowing qualifying basic-rate taxpayers to receive up to £18,570 in tax-free interest per year). For higher-rate taxpayers the tax-free personal savings allowance is £500. Taxpayers paying the additional rate of tax on taxable income over £125,140 cannot benefit from the PSA.

It is important to note that if your total non-savings income exceeds £17,570 then the starting rate limit for savings is unavailable. There is a tapered relief available if your non-savings income is between £12,570 and £17,570 whereby every £1 of non-savings income above a taxpayer’s personal allowance reduces their starting rate for savings by £1.

Interest from savings products such as ISA’s and premium bond wins do not count towards the limit. Taxpayers with tax-free accounts and higher savings can still continue to benefit from the relevant PSA limits.

Banks and building societies no longer deduct tax from bank account interest as a matter of course. Taxpayers who need to pay tax on savings income are required to declare this as part of their annual self-assessment tax return.

Taxpayers that have overpaid tax on savings interest can submit a claim to have the tax repaid. Claims can be backdated for up to four years from the end of the current tax year. This means that claims can still be made for overpaid interest dating back as far as the 2020-21 tax year. The deadline for making claims for the 2020-21 tax year is 5 April 2025.

The marriage allowance applies to married couples and those in a civil partnership 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 currently 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, then you can backdate your claim as far back as 6 April 2020. This could result in a total tax break of up to £1,256 if you can claim for 2020-21, 2021-22, 2022-23, 2023-24 as well as the current 2024-25 tax year. If you claim now, you can backdate your claim for four years (if eligible) as well as for the current 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.

There is an online service available on HMRC to check your National Insurance Contributions (NIC) record online. The service is available at https://www.gov.uk/check-national-insurance-record

In order to use this service, you will need to have a Government Gateway account. If you do not have an account, you can apply to set one up online.

By signing in to the ‘Check your National Insurance record’ service you will also activate your personal tax account if you have not already done so. HMRC’s personal tax account can also be used to complete a variety of tasks in real time such as claiming a tax refund, updating your address and completing your self-assessment return.

Your National Insurance record online will let you see:

• What you have paid, up to the start of the current tax year (6 April 2024).
• Any National Insurance credits you have received.
• If gaps in contributions or credits mean some years do not count towards your State Pension (they are not ‘qualifying years’)
• If you can pay voluntary contributions to fill any gaps and how much this will cost

In some circumstances it may be beneficial, after reviewing your records, to make voluntary NIC contributions to fill gaps in your contributions record to increase your entitlement to benefits, including the State or New State Pension. If you would like to discuss this further, please do not hesitate to be in touch.

The trivial benefits exemption allows you to provide benefits to employees without your employee suffering a tax charge on the benefit. Likewise, there is no Class 1A National Insurance for you, the employer, to pay.

To count as ‘trivial’ for the purposes of the exemption, the benefit must meet all of the following conditions:

• the cost of providing the benefit is £50 or less.
• the benefit is not cash or a cash voucher.
• your employee is not contractually entitled to the benefit.
• the benefit is not provided in recognition of particular services.

Unless your company is a close company (generally a small company) and trivial benefits are provided to a director or other office holder, there is no limit on the number of trivial benefits that you can give to a particular employee in the tax year.

However, the cumulative provision of trivial benefits to directors or other office holders of close companies is capped at £300 for each tax year.

If you provide the benefit to a number of your employees and it is impracticable to work out the actual cost of each individual benefit provided to each individual employee, you can work out the average cost instead. As long as this does not exceed £50 the cost condition will be met.

The deadline to renew a claim for tax credits is 31 July 2017. This time last year, HMRC announced that over 400,000 claimants had still not filed their renewals, and as a direct result, had their payments stopped or amended.

One week before this year’s deadline, HMRC says that over 900,000 claimants have failed to renew.

Readers who claim tax credits and wish to continue receiving these benefits should make sure they have attended to the renewals process before the end of July 2017. According to HMRC, the online process is now the preferred option, being easier to use and more accessible. It allows claimants to track the progress of their renewals application, receive an email confirmation when submitted, and removes the need to scan or type in a bar code number from the back of the renewals pack.

Changes in circumstances that need to be disclosed include:

• Changes in working hours, and
• Changes in income and childcare costs.

Applicants who have no access to a computer can call the Tax Credits Helpline, 0345 300 3900.

It is worth underlining that failure to renew before 31 July may result in a reduction in benefits, it may also mean that some or all the benefits you have received since the beginning of April 2017, will have to be repaid.

To avoid hardship, we recommend that you complete the online renewal process, or call the Help Line without delay.

In a major boost for pioneering small businesses, the Financial Secretary to the Treasury, David Gauke, recently launched a new plan outlining how government will make it easier for small businesses investing in research and development to claim tax relief.

The two-year plan, which is a response to an HMRC consultation, aims to increase take-up of research and development (R&D) tax relief through raising awareness of the relief amongst small businesses and making it easier for them to apply.

The tax relief, which encourages companies to invest in costly new product development, helps companies reduce the amount of corporation tax they pay on profits by offsetting them against any investment in research and development. Latest statistics for 2013-14 show more than 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but the government wants to go further.

Financial Secretary to the Treasury David Gauke said:

R&D is crucial for the long-term growth of the UK economy. Over 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but we need to go further to support pioneering small businesses.

That’s why we’ve published a document setting out our plans to increase awareness and make it easier for people to apply.

The plan, ‘Making R&D Easier: HMRC’s plan for small business R&D tax relief’, was published 28 October 2015 and sets out that:

• From November, small companies – with a turnover under £2 million and fewer than 50 employees – will be able to seek advance assurance on R&D tax relief. This will give them greater certainty and enable them to plan their finances effectively.
• HMRC will explore ways to improve its communication around R&D tax relief, including looking at ways to use data and work with other government agencies to identify companies that have carried out R&D but have not claimed relief.
• Interactive guidance will be developed with stakeholder involvement

HMRC evaluation shows that each £1 of tax foregone by R&D tax relief stimulates between £1.53 and £2.35 of additional R&D investment. SME R&D relief works by way of super deduction, allowing companies to reduce profits liable to corporation tax by 230 per cent of their qualifying R&D expenditure. In 2013-14, businesses received £1.75 billion in R&D tax relief, an increase of almost £750 million since 2009-10.

Is this a good time to invest if you are in business?

Actual business investment in the UK fell in the last quarter of 2014. This was largely driven by the reduction of investment in North Sea oil and gas exploration as global energy prices continued to fall.

Additionally, smaller businesses may have been waiting to see the outcome of the election.

Should you reconsider investment at this time? Certainly, it’s worth taking advantage of the current 100% write off available to those businesses making qualifying purchases of equipment and commercial vehicles. As mentioned in our other blog posting today, currently HMRC will allow businesses to write of up to £500,000 against their taxable profits. This relief is due to reduce after 31 December 2015.

Certainly, businesses should not let the tax tail wag the dog. Financing capital expenditure also needs to be taken into account. Businesses will be unlikely to spend hard earned liquidity especially if they operate in competitive markets where there is downward pressure on margins.

If you are in need of new plant or equipment planning your investment is critical. We would be delighted to help. Call any time to make an appointment.

So now we know. For the next five years we will have a Conservative government, albeit, with a slim majority in the House of Commons.

From a tax point of view George Osborne is continuing as Chancellor and we can probably expect more of the same as he struggles to reduce the deficit, repay debt and maintain a steady increase in economic growth. No mean feat if he achieves this.

As we reported in out last posting to this blog, it is likely there will be a second Finance Bill this year, reinstating the items that were dropped from the first Bill in order to close down government business before the election.

David Cameron also promised to increase the inheritance tax threshold to £1m for married couples and civil partners. We should expect further announcements to remove the higher rate tax relief for pension contributions. Persons who are considering significant contributions to their pension this year should speak with their advisors sooner rather than later if they want to benefit from the present higher rate relief regime.

At the end of this year the present Annual Investment Allowance limit of £500,000 is due to reduce to just £25,000. Hopefully, Mr Osborne will announce a continuation of this valuable tax incentive for businesses in the next Finance Bill.

George Osborne does have an unenviable task. If he depresses economic activity, by severe cuts to government expenditure, tax payers will not be encouraged to spend and GDP will fall. Add to this the anticipated referendum on Europe and the effects of the Scottish vote, and more of the same may be an understatement…

 This posting lists a few (but not necessarily all) of the tax issues you will need to consider when you are planning a new business:

1. Get you business registered with HMRC, failure to do this can lead to penalties. If you are incorporating your business, HMRC generally pick up your business registration via their links with Companies House. But if you are aiming to be self employed, as a sole trader or in partnership, you will need to notify HMRC within certain time limits of your commencement date.
2. In similar vein, if you need to employ staff you must register as an employer with HMRC.
3. If you intend to register for VAT from the date you commence to trade you can still recover input VAT that you have paid on certain setup costs that you expended prior to the official start date.
4. If you intend to register your business for VAT could you take advantage of one of HMRC’s special VAT schemes? For example:

1. Cash accounting: pay over the VAT you have collected on your sales when you are paid by your customer, rather than when you issue your sales invoices. There are turnover limits to registration, but this option can have a significant impact on cash flow if the amounts you are owed is more than the amounts you owe.
2. Flat rate scheme: using this scheme you calculate the amount you owe as a fixed percentage of your turnover each quarter (including VAT). For smaller businesses, who do not have significant VAT inclusive costs, this scheme can produce additional profits and simplify the calculation of your quarterly returns.
3. Annual accounting: using this scheme you send in one VAT return a year instead of the usual four. Also for nine months of the year you make agreed payments on account to cover VAT due. The scheme is simple to administer, only one set of calculations per annum, and the monthly payments help to spread the cash flow impact of payments made.

5. Invest in tax planning. The UK’s tax code is one of the most complex in Europe. We recommend that you take tax planning advice before you start in business and again at certain key moments in your trading year. At the very least you should discuss your trading results with your advisor before the end of your first trading year. It always pays to see what planning options are available before you take action to implement change.

If you are about to set-up a new business please call, we offer a no obligation first appointment to prospective new clients.    

19 May 2015 – PAYE and NIC deductions due for month ended 5 May 2015. (If you pay your tax electronically the due date is 22 May 2015.)

 19 May 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2015.

 19 May 2015 – CIS tax deducted for the month ended 5 May 2015 is payable by today.

 31 May 2015 – Ensure all employees have been given their P60s for the 2014-15 tax year.

 1 June 2015 – Due date for Corporation Tax due for the year ended 31 August 2014.

 19 June 2015 – PAYE and NIC deductions due for month ended 5 June 2015. (If you pay your tax electronically the due date is 22 June 2015.)

 19 June 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2015.

 19 June 2015 – CIS tax deducted for the month ended 5 June 2015 is payable by today.