HM Revenue and Customs has secured three tribunal wins against tax avoidance schemes, protecting over £260 million in tax.

All three rulings uphold earlier judgments in HMRC’s favour at the First-tier Tribunal.

The Upper Tribunal dismissed an appeal brought by users of a scheme that sought to create artificial losses by using a combination of the employment Income and Capital Gains Tax rules on share options. The judges dismissed the appeal without needing to hear substantive arguments from HMRC, and indicated that written reasons would follow. There were 420 users of this scheme.

The Upper Tribunal also dismissed two other cases. These bespoke schemes were designed by banks to provide the users with a much higher tax-free return on their cash deposits than they could have obtained by placing funds in a normal deposit account. Both of these schemes were marketed and sold by banks some years ago for substantial fees. The court joined these two separate cases because of similarities between the schemes.

 HMRC has kindly published a list of the tax changes that affect individuals from 6^th April 2015. We have reproduced the list below.

• Individuals over the age of 55 have flexible access to their defined contribution pension savings
• The Income Tax Personal Allowance increases to £10,600
• The higher rate Income Tax threshold increases to £42,385
• The new Marriage Allowance comes into effect
• The starting rate of savings Income Tax reduces from 10% to 0% for savings up to £5,000
• The cash ISA limit increases to £15,240
• Child Trust Funds can now be transferred into Junior ISAs
• Spouses can now inherit their deceased partner’s ISA benefits
• If an individual dies before the age of 75, they can now pass on their unused defined contribution pension savings free of Income Tax
• Beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity can now receive any future payments from such policies free of Income Tax
• Employers will no longer have to pay employer NICs for employees under the age of 21
• Class 2 NICs for the self-employed can now be collected through Self Assessment
• The Employment Allowance extends to include people employing care and support workers to look after themselves or family members
• A new annual remittance basis charge of £90,000 is introduced for non-domiciled individuals who have been resident in the UK in at least 17 of the last 20 years, and the charge paid by non-domiciled individuals who have been resident in the UK in at least 12 of the last 14 years has increased from £50,000 to £60,000
• Non-UK resident individuals, trusts, personal representatives and narrowly controlled companies are now subject to Capital Gains Tax on gains accruing on the disposal of UK residential property
• Capital Gains Tax annual exemption amount has increased to £11,100
• The Capital Gains Tax charge on disposals of properties liable to ATED extends to cover residential properties worth £1 million – £2 million
• The requirement that 70% of Seed Enterprise Investment Scheme money must be spent before EIS or VCT funding can be raised is removed
• The Fuel Benefit Charge multiplier for both cars and vans increases by RPI
• The Van Benefit Charge increases by RPI. In 2015-16 the Van Benefit Charge rate paid by zero emission vans is 20% of the rate paid by conventionally fuelled vans
• Tax Credit payments are stopped in-year where, due to a change in circumstances, a claimant has already received their full annual entitlement

If you need more information regarding any of these changes please call.

If you pay your employees a mileage rate for the business use of their personal vehicles, as long as you do not exceed the approved rates per mile, there is no necessity to report these payments to HMRC and the payment will not be treated as a taxable benefit. Employers and employees may also find the notes that follow instructive:

1. The maximum tax free rates per mile for the use of a car are: 45p per mile for the first 10,000 business miles and 25p per mile thereafter.
2. Employers are not obliged to pay these rates, but if they are exceeded the excess will need to be reported to HMRC as a benefit in kind.
3. If employers pay less than the 45p (25p) rates the employee can obtain tax relief on the difference by making a claim to HMRC.
4. Employers can reclaim the deemed VAT on the fuel elements of the mileage allowance payments by using the approved fuel rates. See table below.

 Advisory fuel rates per mile from 1 March 2015 are:

• 1400cc or less: petrol 11p; LPG 8p.
• 1401-2000cc: petrol 13p; LPG 10p.
• Over 2000cc: petrol 20p; LPG 14p.

 Diesel rates are:

• 1600cc or less: 9p
• 1601-2000cc: 11p
• Over 2000cc: 14p

 Example:

 David is paid for a 200 mile business trip at 30p per mile (his annual business mileage claims are well below the 10,000 maximum). He runs a 1500cc petrol car. He can make a claim to HMRC to deduct £30 mileage allowance from his taxable pay (200 x 15p).

 His employer can recover VAT input tax on the fuel element (200 x 13p) x 1/6 = £4.33.

 If you would like help to make back-dated claims to recover VAT if you are an employer; or make a claim if you are paid less than the 45p (25p) rate, please call for further advice.

The published list of tax changes that affect primarily businesses are listed below.

• The Corporation Tax rate has been reduced to 20%
• The new Diverted Profits Tax has been introduced
• The bank levy has increased from 0.156% to 0.21%
• Air Passenger Duty has been restructured – abolishing bands C and D
• Hospice charities, blood bikes, search and rescue, and air ambulance charities will be eligible for VAT refunds
• Business rates changes (England only):
  • The business rates multiplier has increased from 48.2p to 49.3p (47.1p to 48.0p for small business multiplier). This includes the 2% inflation cap
  • The Small Business Rate Relief scheme has doubled for a further year – providing 100% relief for businesses with a single property with a rateable value of less than £6,000, and tapered relief with a rateable value of £6,000 – £12,000
  • The business rates discount for shops, pubs, cafes and restaurants with a rateable value of £50k or below has increased from £1,000 to £1,500
• The cultural test for high-end TV tax relief has been modernised and the minimum UK expenditure requirement for all TV tax reliefs has reduced from 25% to 10%
• A new tax relief on the production of children’s television has been introduced
• The amount of banks’ annual profit that can be offset by carried forward losses has been restricted to 50%
• Two new bands for the Annual Tax on Enveloped Dwellings (ATED) have been introduced
• Capital Gains Tax exemption for wasting assets will only apply if the corporate selling the asset has used it in their own business
• An investment allowance for North Sea oil and gas, replacing the existing offshore field allowances and simplifying the existing regime, has been introduced
• A reduced rate of fuel duty to methanol will apply – the rate is 9.32 pence per litre
• Fuels used to generate good quality electricity by CHP (combined heat and power) plants for onsite purposes are exempt from the Carbon Price Floor
• Climate Change Levy main rates have increased in line with RPI
• The VAT registration threshold has increased from £81,000 to £82,000 and the deregistration threshold from £79,000 to £80,000
• Scottish Government’s Land and Buildings Transactions Tax (LBTT) will replace Stamp Duty Land Tax in Scotland
• The associated companies rules have been replaced with simpler rules based on 51% group membership
• The standard and lower rates of landfill tax have been increased in line with RPI

Again, if you need more information on any of these changes please call.

The most generous tax allowance presently available to businesses that encourages direct investment in new plant, equipment and commercial vehicles, is the Annual Investment Allowance (AIA).

If you buy qualifying assets you can write off the expenditure against your taxable profits in the same accounting period. The present limit to this allowance is generous, £500,000.

The AIA is due to reduce from 1 January 2016, and unless Parliament set a new limit from that date, it will revert to a paltry £25,000.

Consequently, business readers who are contemplating an investment in new plant and equipment should take this AIA into account when making a decision to invest.

Entrepreneurs that stand to gain the greater advantage are the self-employed: sole traders, partnerships and LLPs, who may be faced with income charges at the 40% or 45% rates in the tax year 2015-16.

For incorporated businesses and self-employed traders paying tax at the standard rate of income tax, the tax savings will be limited to 20% of qualifying expenditure.

Certainly, we do not advise making investment decisions based solely on any tax advantages that may flow from the investment. Due regard should be taken of the effects on profitability, cash flow and future business growth.

If you would like to discuss how this relief could benefit your business, we would be happy to discuss your options. Planning for large investments is key. Do not make decisions without considering all the effects. Please call if you would like to discuss these matters in more detail.

All of this year’s (2015) winners are UK businesses leading the way in international trade, innovation and sustainable development in a broad range of sectors including car manufacturing, education, software design and fashion.

The Department for Business, Innovation and Skills (BIS) unveiled the 141 winners of the Queen’s Awards for Enterprise and 6 individual recipients of the Queen’s Award for Enterprise Promotion 21 April 2015.

The Queen’s Awards scheme is regarded as the most prestigious business awards in the country and 2015 marks its 50th anniversary.

This year, 105 businesses received awards for international trade; 24 for innovation and 12 for sustainable development. Two small companies, Wavestore Ltd and Hallmarq Veterinary Imaging Ltd, achieved double recognition, receiving awards for both innovation and international trade. In addition, 6 people who were nominated by their peers have been recognised for their efforts to encourage entrepreneurship in the UK with the Queen’s Award for Enterprise Promotion. Winners include entrepreneurs, a professor of creative entrepreneurship and the founder of the Creative Innovation Centre in Somerset.

Winners of the Queen’s Awards for Enterprise are visited by a Royal representative and are presented with a crystal bowl as a mark of their achievement. They are also invited to attend a reception at Buckingham Palace in July 2015. Businesses are also able to use the Queen’s Award emblem in advertising, marketing and on packaging for 5 years.

Firms that won a Queen’s Award for international trade showed they have benefited from substantial international growth in overseas earnings and commercial success within their sector.

Awards for innovation are given to businesses that can demonstrate that their innovative products or services are commercially successful.

Sustainable development winners have to show they are involved in activity that ensures a better quality of life for everyone, now and in the future.

The Queen’s Award for Enterprise Promotion is for individuals who have played an important role in promoting enterprise skills and supporting entrepreneurs.

Entries to the 2016 Awards close on Wednesday 30 September 2015. To apply and for more information, go to www.gov.uk/queens-awards-for-enterprise/overview

If you move abroad

If you open an Individual Savings Account (ISA) in the UK and then move abroad, you can’t put money into it after you move (unless you’re a Crown employee working overseas or their spouse or civil partner).

However, you can keep your ISA open and you’ll still get UK tax relief on money and investments held in it.

You can pay into your ISA again if you return and become a UK resident (subject to the current annual ISA allowance of £15,240).

If you die

Your ISA ends on the date of your death. There will be no Income Tax or Capital Gains Tax to pay up to that date but ISA investments will form part of your estate for Inheritance Tax purposes.

Your ISA provider can be instructed to sell the investments and either:

• pay the proceeds to the administrator or beneficiary of your estate
• transfer the investments directly to them

If your spouse or civil partner dies

If your spouse or civil partner died on or after 3 December 2014, you can inherit their ISA allowance.

As well as your normal ISA allowance, you can add a tax-free amount up to the value they held in their ISA when they died.

Contact your ISA provider or the provider of your spouse or civil partner’s ISA for details.

On 26 March 2015 the government announced a new initiative to support taxi owners to convert to lower emission vehicles. The initiative is £45 million to support the rollout of greener taxis. A £20 million fund will be made available to local authorities to support the rollout of ultra-low emission taxis across the UK. The money will be available to reduce the upfront cost of purpose built taxis and to install charging infrastructure for taxi and private hire use.

A further £25 million has been set aside specifically for the Greater London Area to help taxi drivers cover the cost of upgrading to a greener vehicle.

All taxis will also qualify for the government’s plug-in car grant, which currently offers up to £5,000 off the cost of an eligible low emission vehicle.

From 26 March local authorities are invited to bid for feasibility studies to prepare for the rollout of these vehicles in their fleets. The news follows Geely’s recent announcement outlining plans for a new £250 million state of the art facility to produce the next generation of low-emission London Black Taxis. Geely, who owns the iconic London Taxi Company, was awarded £17 million from the government’s Regional Growth Fund to build this facility, which will create 1,000 local jobs and ensure the London black taxi continues to be designed, developed and made in the UK.

These new taxis will comply with the new regulations being introduced by the Mayor of London that will require all London taxis to be zero-emission capable from January 2018.

Business Minister Matthew Hancock said:

This is a historic moment for the automotive sector and goes to show that it is thriving in Britain today. Low emission vehicles are the future and show that we can meet our climate change obligations in a way that enhances technology. I’m looking forward to the roll-out of greener taxis across the UK and have no doubt that with the support of Geely this will happen very quickly.

Mayor of London, Boris Johnson, said:

As London strives towards the greenest taxi fleet from 2018, it is essential to support the taxi trade in the transition to cleaner vehicles. With the additional funds announced today, more help is on the way for taxi drivers to upgrade to the latest technology in zero-emission capable cabs. Alongside the world’s first Ultra Low Emission Zone from 2020 these measures will boost jobs and growth in the development and manufacturing of ultra low emission technologies, secure the long-term future of the taxi industry, and ensure everyone who lives, works in, or visits our city has the cleanest possible air to breathe.

You’re on an emergency tax code if your payslip says your tax code is one of the following:

• 1060L W1
• 1060L M1
• 1060L X

Emergency tax codes are temporary. While you’re on an emergency tax code, you pay tax on all your income above the basic Personal Allowance (£10,600 for the 2015 to 2016 tax year).

If your tax code is just 1060L it’s not an emergency tax code.

Tax code 0T can also be used as a temporary code. It means you don’t get any Personal Allowance you’re entitled to until your tax code is updated.

When you might get an emergency tax code

You may be put on an emergency tax code if you’ve started:

• a new job
• working for an employer after being self-employed
• getting company benefits or the State Pension

Getting the right tax code

Your tax code is usually updated automatically after you’ve given your employer details of your previous income or pension. This is usually from your P45 – if you don’t have one, your employer may ask you to fill in a ‘new starter checklist’.

You’ll be sent your new tax code in a PAYE Coding Notice. HM Revenue and Customs (HMRC) will also tell your employer or pension provider. Your next payslip should show:

• your new tax code
• adjustments to your pay if you were paying the wrong amount of tax

Please contact us if you are concerned that you may have the wrong tax code and be paying too much tax, or if you receive a Notice of Coding that you don’t understand.

Following on from our previous blog posting: tax changes that were effective from 1 April 2015 (and that mainly affected Companies), we have included below tax changes that affect individuals from 6 April 2015, the start of the 2015-16 tax year.

• Individuals over the age of 55 have flexible access to their defined contribution pension savings
• The Income Tax Personal Allowance increases to £10,600
• The higher rate income tax threshold increases to £42,385
• The new Marriage Allowance comes into effect
• The starting rate of savings income tax reduces from 10% to 0% for savings up to £5,000
• The cash ISA limit increases to £15,240
• Child Trust Funds can now be transferred into Junior ISAs
• Spouses can now inherit their deceased partner’s ISA benefits
• If an individual dies before the age of 75, they can now pass on their unused defined contribution pension savings free of income tax
• Beneficiaries of individuals who die under the age of 75 with a joint life or guaranteed term annuity can now receive any future payments from such policies free of income tax
• Employers will no longer have to pay employer NICs for employees under the age of 21
• Class 2 NICs for the self-employed can now be collected through Self-Assessment
• The Employment Allowance extends to include people employing care and support workers to look after themselves or family members
• A new annual remittance basis charge of £90,000 is introduced for non-domiciled individuals who have been resident in the UK in at least 17 of the last 20 years, and the charge paid by non-domiciled individuals who have been resident in the UK in at least 12 of the last 14 years has increased from £50,000 to £60,000
• Non-UK resident individuals, trusts, personal representatives and narrowly controlled companies are now subject to Capital Gains Tax on gains accruing on the disposal of UK residential property
• Capital Gains Tax annual exemption amount has increased to £11,100
• The Capital Gains Tax charge on disposals of properties liable to ATED extends to cover residential properties worth £1 million – £2 million
• The requirement that 70% of Seed Enterprise Investment Scheme money must be spent before EIS or VCT funding can be raised is removed
• The Fuel Benefit Charge multiplier for both cars and vans increases by RPI
• The Van Benefit Charge increases by RPI – in 2015-16 the Van Benefit Charge rate paid by zero emission vans is 20% of the rate paid by conventionally fuelled vans
• Tax Credit payments are stopped in-year where, due to a change in circumstances, a claimant has already received their full annual entitlement

Please contact us if you need more information on any of the above changes.