August 2008

HMRC have now issued further guidance on the increase in the personal tax allowance which is due to take effect from 7 September 2008.

The guidance is aimed at both employers and employees. Although the increase takes effect for pay dates from 7 September onwards the change will effectively be backdated for the majority of individuals until the beginning of the tax year.

As has been widely reported the increase in personal allowances from £5,435 to £6,035 will mean that the majority of basic rate taxpayers will be £120 better off for the current tax year. The increase is designed to compensate those tax payers who were worse off following the removal of the 10% starting rate of tax from non-savings income. Higher rate taxpayers will not be better off following the increase in personal allowances due to a corresponding reduction in the point at which taxpayers start paying the higher rate of tax of 40%.

Please get in touch if you require any clarification of the new rules.

Internet Links: HMRC guidance Employee guidance and Employer guidance

August 2008

Businesses have long been allowed to correct net errors not exceeding £2,000 in their VAT returns. From the first new VAT period commencing on or after 1 July 2008, HMRC have raised the previous limit of £2,000 to a minimum figure of £10,000.

Errors of more than £10,000 can also be put right on the return for businesses whose turnover for VAT purposes exceeds £1 million.

HMRC are in the process of updating their website to reflect this change.

Please do get in touch if you have any concerns in this area.

Internet Link: HMRC notes on VAT errors

August 2008

Do you pay any professional subscriptions?  If so then tax relief may be due on the subscription as long as the professional body appears on the latest HMRC list.  The list includes all bodies approved by HMRC up to 30 May 2008.

HMRC update the list periodically.

Please get in touch if you are not already claiming tax relief and would like to do so.

Internet Link: HMRC list

August 2008

HMRC have issued revised guidance on the system of penalties which they will be able to apply to taxpayers.

The revised penalties were introduced as part of legislation enacted in the Finance Act 2007. The penalties generally affect returns which cover the period from April 2008 and are due to be submitted from 1 April 2009.

Internet Link: HMRC leaflet