Category Archives: Tax News

Survey reveals majority of people confused by IHT and ISAs

New research has revealed that the majority of people do not understand the rules which govern Inheritance Tax (IHT) and ISAs in England and Wales.

According to a survey recently featured in Moneywise magazine, there is ‘widespread confusion’, with more than half (54 per cent) of British adults admitting they unsure whether IHT is payable on ISAs.

Furthermore, 21 per cent of adults wrongly believe that ISAs do not form part of a person’s taxable estate – and will therefore never attract IHT.

Following the publication of the findings, Octopus Investment – the financial services firm which commissioned the research – has said that more needs to be done by the Government in order to “educate and raise awareness” of the rules and restrictions which apply to IHT.

The comments follow Chancellor, Philip Hammond’s call for a review of IHT amid concerns that the rules governing the UK’s existing IHT regime are “particularly complex” and are leaving many Britons completely bewildered.

In England and Wales, individuals are entitled to an IHT allowance of £325,000. Any estates valued at higher than this will attract IHT at a rate of 40 per cent – but there are numerous ways individuals can mitigate their IHT liability.

For example, if a person leaves at least 10 per cent of their net estate to a charitable cause, the amount of IHT they will be charged on the remainder of their estate will be reduced from 40 per cent to just 36 per cent.

At Moore Thompson we can help sort out your tax affairs. We will work on your behalf to ensure that your tax liability is minimised so that more of your hard-earned money stays with you, your business and, eventually, your loved ones. To find out more, please contact us.

Spring Statement 2018

By the time Chancellor Philip Hammond rose to his feet in the House of Commons to deliver the first Spring Statement, he had already offered plenty of hints that this would be a low-key affair.

Gone was the primetime Wednesday slot after Prime Minister’s Questions, gone was the trailing of policy announcements in the days and weeks beforehand and gone was the set-piece photo call with the red box outside Number 11.

This was all carefully orchestrated. Mr Hammond could not have been clearer that there were to be no rabbits pulled from hats.

In line with the move towards a single fiscal event each year, this was to be a straightforward response to the Office for Budget Responsibility’s (OBR) updated economic forecasts, dispensing with the usual drama of Budget Day.

Indeed, Mr Hammond may well be relieved that he does not need to deliver a Budget until the Autumn. A year ago, his first Budget was widely seen as disastrous for the Government, with the Chancellor having to quickly backtrack on heavily-criticised tax rises for the self-employed, providing helpful ammunition for the opposition at the subsequent general election.

Nevertheless, being the first of its kind, the Spring Statement was still something of an unknown quantity and the business community was still curious to see what he might have to say as they waited for the cheers and jeers to quieten in the Commons.

As it turned out, the Chancellor stuck to his guns, saying at the start of the speech that the UK had been unique amongst major economies in making tax changes twice each year. He added the move to a single fiscal event is intended to give greater certainty to business.

The Economy

There was a strong emphasis on jobs in the Chancellor’s assessment of the state of the UK economy. He noted that the wages of the lowest paid have increased by seven per cent since 2015 and that there are three million more people in work since 2010. He told MPs that the OBR now predicts 500,000 more people will be in work in 2022.

The OBR revised up its GDP growth forecast for 2018 from 1.4 per cent to 1.5 per cent. This is then predicted to remain in line with previous predictions at 1.3 per cent in 2019 and 2020, before rising to 1.4 per cent in 2021 and 1.5 per cent in 2022.

Following the recent rise in interest rates, the OBR now expects that inflation will now return to its two per cent target over the next year, while wages are expected to rise faster than prices over the next five years.

The Chancellor said figures show that the manufacturing sector has enjoyed its longest period of expansion for half a century.

The Public Finances

Moving to the state of the public finances, the Chancellor noted that the UK has now had its first sustained fall in public sector debt for 17 years, saying that this represents a ‘turning point’ for the economy.

Debt as a percentage of GDP is expected to fall from 86.5 per cent in 2018-19 to 77.9 per cent in 2021-22.

Meanwhile, borrowing is now forecast to be £45.2 billion in 2018, £4.7 billion less than had been predicted by the OBR in November 2017.

In the wake of what he was eager to present as positive predictions, the Chancellor said that he is on course to increase public spending at the Autumn Budget, so long as the OBR’s predictions for the public finances are borne out.

Business measures

Mr Hammond said he was keen to support British business, before promising that the next business rates revaluation exercise will be brought forward by one year to 2021, meaning rates will better reflect current rental values.

He also said that there will be a review of how to tackle the problem of late payments, which are seen as an ever-increasing problem for SMEs in particular.

Continuing the theme, and appearing to go against the suggestion that there would be no spending commitments in the speech, Mr Hammond said the Education Secretary will make up to £80 million available to small businesses to take on new apprentices.


As had been widely expected, Mr Hammond took the opportunity to announce a number of consultations on the future of the tax system.

Top of the Chancellor’s list was a consultation on ‘Reducing single-use plastic waste through the tax system’. He said the Government is inviting views on how to tackle the problem of plastic waste through the tax system.

He also set his sights on large multinational digital businesses, publishing a position paper on ‘Corporate tax and the digital economy’, including measures relating to VAT.

Maintaining the focus on the digital economy, the Chancellor announced a consultation on the role cash will play. He said the Government will seek views on how to support consumers and businesses to use digital payments, while ensuring those who need to can continue to use cash. The consultation will also seek views on the use of cash in tax evasion and money laundering.

Meanwhile, the Chancellor also said that the Government would consult on extending tax relief for employees and the self-employed who fund their own training.

Although not mentioned in the Chancellor’s speech, the hours following the Statement also saw the Treasury publish a consultation into the VAT registration threshold, suggesting that the current flat threshold disincentivises businesses from pursuing growth.


One of the biggest advantages a politician has in Government is the ability to set the terms of the political debate and to mark where the dividing lines should fall.

That is what the Chancellor appears to have aimed for with his first Spring Statement. He made a clear statement of intent on the Government’s direction of travel on tax and spending by hinting at spending increases in the Autumn Budget.

Much of the debate in the coming months is likely to revolve around the question of who should benefit from any increases.

So while there were no specifics on tax and spending for businesses to take away from the speech, there were important indications about what may be to come for businesses and the economy.

Inheritance Tax – not making a Will could land your next of kin with a hefty bill

Inheritance Tax (IHT) payments are expected to reach record levels with the latest figures predicting that the Government will received £900 million more than they had originally predicted.

However, there are a number of ways that you can plan ahead in order to reduce the burden of IHT payable on your estate when you are no longer here.

One of the simplest and most effective ways of reducing the IHT bill payable on your estate, is to make a Will.

If a person dies intestate (without a valid Will in place) their assets are handed out according to strict set of rules.

Dying without a Will is more common that you might imagine – around one in three people die intestate.

Back in 2014, the comedian and actor, Rik Mayall, died unexpectedly and probate records revealed that he had not put in place a Will, giving instructions on how his £1.2 million estate should be shared out amongst his family.

In cases such as this, where a married person with children dies without a Will, intestacy rules give a portion of the deceased’s assets to any surviving children, triggering a potential tax liability if the assets exceed the threshold.

However, if a Will is in place, more or all of the assets can be left to the surviving spouse, providing time in which to make other arrangements to reduce the eventual Inheritance Tax bill at the death of the second spouse.

At Moore Thompson we can help sort out your tax affairs. With careful planning, it is possible to minimise your tax liability, ensuring that more of your hard-earned money stays with you, your business and, eventually, your loved ones. To find out more, please contact us. 

Excuses, excuses: HMRC reveals top late tax return apologies

HM Revenue & Customs (HMRC) has once again revealed the worst excuses that taxpayers have given them for failing to meet the 31 January Self-Assessment (SA) deadline.

Whilst there are sometimes reasonable excuses for a late submission, such as a serious illness, disability or a serious mental health condition that makes a person incapable of filing their tax return, others can be imaginative.

HMRC’s most recent list of top excuses, includes:

  • I couldn’t file my return on time as my wife has been seeing aliens and won’t let me enter the house.
  • I’ve been far too busy touring the country with my one-man play.
  • My ex-wife left my tax return upstairs, but I suffer from vertigo and can’t go upstairs to retrieve it.
  • My business doesn’t really do anything.
  • I spilt coffee on it.

As well as the excuses, HMRC also receives some questionable expense claims including:

  • A three-piece suite for a partner to sit on when the taxpayer is doing their accounts.
  • Birthday drinks at a Glasgow nightclub.
  • Vet fees for a rabbit.
  • Hotel room service – for candles and prosecco.
  • £4.50 for sausage and chips meal expenses for 250 days (£1,125 in total).

Angela MacDonald, HMRC Director General of Customer Services, said: “Each year we’re making it easier and more intuitive for our customers to complete their tax return, but each year we still come across some questionable excuses, whether that’s blaming a busy touring schedule or seeing aliens.

“However, help will always be provided for those who have a genuine excuse for not submitting their return on time.

“We also receive absurd expense claims from vet fees for a rabbit to room service at a hotel. It is unfair to make honest taxpayers pick up the bill for other people’s spurious claims, so HMRC will only accept sincere claims such as legitimate expenses for a job.”

The deadline for sending 2016-17 SA tax returns to HMRC, and paying any tax owed, was 31 January 2018.

Those who may have missed the deadline may find that they have already received an automatic £100 fine, but the longer a tax return is left the more the penalties can increase, so it pays to act quickly and get professional advice if a return is submitted after the deadline.

Link: HMRC’s top tax return excuses

Millennials set for ‘inheritance boom’… but not until the 2030s

A new report from think-tank, the Resolution Foundation, predicts that so-called ‘millennials’, those aged between 17 and 35, will receive the biggest inheritance of any post-war generation from their baby boomer parents and grandparents.

The think-tank estimates that the average value of inheritances will more than double over the next two decades, peaking in 2035. By this point, the average age of beneficiaries would be 61.

In contrast, only approximately one in three adults born in the 1930s received an inheritance.

According to the Resolution Foundation, around two in every three young adults have property-owning parents.

Thirty-year-olds today are only half as likely to own their home as baby boomers were at the same age.

Laura Gardiner, senior policy analyst at the Resolution Foundation, said: “Older generations have benefitted hugely from the big increases in household wealth in Britain over recent decades.

“While the millennials have done far less well in accumulating their own assets, they are likely to benefit from an inheritance boom in the decades ahead.

“This is likely to be very welcome news for those millennials, including some from poorer backgrounds who in the past would have been unlikely to receive bequests.

“They have the good fortune to benefit from the luck of the baby boomer generation.”

Link: Millennials to secure ‘inheritance boom’

Value of estates set to double over the next 20 years

The current younger generation are set to receive the biggest ‘inheritance boom’ of any post-war generation, but will have to wait until they are approaching retirement to benefit from the windfall, according to a new study.

Independent think tank, the Resolution Foundation, has estimated that so-called ‘millennials’ are set to benefit from a significant increase in the amount of inheritance they receive over the coming years, as the average value of estates passed on by parents and grandparents continues to rise.

Over the next 20 years, the Resolution Foundation has calculated that the total value of inheritances will more than double.

However, due to the relatively high life expectancies of their parents, it is thought that most millennials (defined as those aged 17 to 35 for the purposes of the study) will, on average, not receive their inheritance until the age of 61.

Despite this, young people are still expected to benefit in the short-term, after separate studies found that an increasing number of grandparents are passing on a portion of their estate to grandchildren in their Wills, in a bid to help them take their first steps onto the property ladder.

Worrying research carried out by insurance company, Drewberry, in late 2017 found that 87 per cent of UK adults who intend to pass on an inheritance have never sought specialist advice in relation to the IHT implications of doing so.  

Anyone thinking of leaving an inheritance to their children or grandchildren should always seek specialist financial advice well in advance.

At Moore Thompson we can help sort out your tax affairs. With careful planning, it is possible to minimise your tax liability, ensuring that more of your hard-earned money stays with you, your business and, eventually, your loved ones. To find out more, please contact us.

New Year, New Home – Self-employed reminded about changes to SA302

With many people looking to get on to the housing ladder in 2018, it has never been more important to have easy access to a mortgage.

However, since HM Revenue & Customs (HMRC) changed the way it issues details of tax calculations and tax year overviews for submission with mortgage applications last year, self-employed workers in the UK have found it harder to get a mortgage.

Before 4 September 2017, self-employed workers and their accountants had been able to get a paper copy of form SA302 that lenders require in order to complete the mortgage application process.

HMRC now no longer issues paper copies and instead provides digital versions.

This has restricted the number of lenders that will offer a mortgage to self-employed workers, with initial reports suggesting that lenders are still insisting on original paper copies rather than electronic printouts, despite HMRC undertaking discussions with UK Finance, formerly the Council of Mortgage Lenders, about lenders’ requirements.

When submitting information to eligible mortgage lenders, self-employed individuals and their advisers are now required to supply the relevant year’s tax computation, printed from the adviser’s software, along with the tax year overview that advisers can print from HMRC’s online services page in order to act as a self-serve SA302 that will satisfy lenders.

Many accountants are therefore reminding self-employed individuals to check their lender’s requirements before making an application.

LINK: SA302 Tax Calculation

Recently given your staff a gift?

Maybe you have recently given your staff members a bottle of wine or a voucher to help celebrate the New Year or as a thank you for their services in 2017, but did you know this could be classed as a trivial benefit in kind?

While the cost may not be ‘trivial’ to some, this tax relief does cover benefits, such as taking employees out for meals or giving gifts – costs which quickly add up.

New rules introduced in 2016 overhauled the procedures for taxing trivial benefits in kind, which state that any benefit that meets the following criteria set out by HM Revenue & Customs is exempt from income tax and national insurance:

  • The cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person);
  • The benefit is not cash or a cash voucher;
  • The employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements); and
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).

The rules differ slightly for office holders of the company, family members and members of the household, whose exemption is capped at £300 for each tax year.

If you believe that such a benefit has been provided to your employees then you may no longer need to include them on a P11D form, as has previously been the case.

Link: Tax exemption for trivial benefits in kind

Don’t PIN your hopes on paying your tax by credit card

If you have in the past paid your tax bill using a credit card, you will need to use a different method this year.

That is because credit card payments to HM Revenue & Customs (HMRC) have fallen victim to a Government initiative originally intended to make it easier to pay for goods and services in this way.

This month sees the introduction of a ban on the practice of passing on credit card charges to consumers, whether by commercial enterprises or Government bodies. As a result, HMRC is now unable to do so and has said it would be “unfair” to absorb the charges because this would pass the burden onto other taxpayers.

The last five years have seen HMRC pass on £50 million in credit card charges to taxpayers, according to The Telegraph.

An HMRC spokesman told The Telegraph: “We will no longer be accepting personal credit card payments from the 13 January as new rules mean that we can no longer pass on what our bank charges for processing a credit card payment.

“It would be unfair to expect other taxpayers to pick up this cost. There is a range of ways for people to pay us depending on the type of tax being paid, including debit cards, Direct Debit, Faster Payment and BACS.”

Link: Taxpayers banned from using credit cards to pay personal tax bills

Points mean penalties in HM Revenue & Customs late filing reforms

A shake-up of penalties for late submissions and payments under the Government’s Making Tax Digital (MTD) programme is to see a points-based system introduced, HM Revenue & Customs (HMRC) has confirmed.

The new system is set to be introduced in tandem with the launch of MTD for VAT in 2019 and will see taxpayers receiving a point each time they file or pay after a deadline.

Taxpayers who then exceed a penalty threshold will be fined and will receive further fines each time they subsequently miss a deadline. After a period of meeting deadlines on time, the points total will reset to zero.

HMRC has proposed the following penalty thresholds:

Submission frequency       Penalty threshold

Annual                                     2 points

Quarterly                                 4 points

Monthly                                   5 points

Meanwhile, it has proposed the following good compliance periods, in which taxpayers who have exceeded the above thresholds would need to meet every deadline in order to see their points totals reset to zero:

Submission frequency      Good compliance period

Annual                                     2 submissions

Quarterly                                 4 submissions

Monthly                                   6 submissions

The move is intended to penalise those who repeatedly miss deadlines while offering leniency in respect of one-off late filings or payments and encouraging improvement from those who have repeatedly missed deadlines. 

Full details of the scheme are to be included in draft legislation, which is expected to be published this summer before being put out for consultation.

Link: Making Tax Digital – sanctions for late submission and late payment