We have included an article this month which highlights
the dangers of missing filing and payment deadlines regarding
submission of year-end payroll returns to the Inland Revenue.
There are also articles covering Civil Partnerships and Venture
Capital Trusts.
Venture Capital Trusts
Venture Capital Trusts or VCT's were introduced by the Finance
Act 1995 to increase the supply of finance to small unquoted
higher risk trading companies.
VCT's are broadly similar to investment trusts - must be
listed on the Stock Exchange and can invest up to £1 million
per year in each qualifying company in their portfolio.
VCT's offer investors attractive tax concessions.
-
Subscribers of new shares in VCT's can claim tax relief
on their investment provided the shares are held for at
least three years.
-
The rate of income tax relief allowed was increased from
20% to 40% for the two year period starting on the 6 April
2004.
-
There is a maximum annual investment for which income
tax relief is available of £200,000. (This applies from
6 April 2004.)
-
No income tax is payable on dividends from ordinary shares
held in VCT's.
-
No capital gains tax is payable when individuals dispose
of their ordinary shareholdings in VCT's.
Up to the 6 April 2004 it was possible to defer capital gains
tax on gains reinvested in VCT shares. From the same
date that concession is no longer available.
Payroll - avoiding penalties and interest payments.
April sees the beginning of a hectic period for payroll managers.
During April and the following three months a series of deadlines
occur regarding returns to be made to the Inland Revenue for
the year to 5 April 2005. Late payment of any outstanding
tax or national insurance will trigger interest payments,
and late filing of returns will in most cases trigger a penalty
or fine.
Please note that not only must you file returns on time,
but you must also ensure that the returns are completed correctly.
A common cause for rejection of the P35 annual payroll return
is that P14's show incorrect national insurance numbers. In
particular use of TN temporary numbers will be rejected from
2004-2005.
We have set out the major filing and payment events as an
expanded tax diary, with a note when interest and penalty
payments will be applied.
All dates are 2005:
-
April 19 - Payments for month 12 PAYE
and Class 1 NIC's to be paid by this date. (If you pay
your dues electronically this date is extended to the
22 April)
-
April 19th is also the last day for payment of all outstanding
PAYE or Class 1 NIC's for the year to 5 April 2005. (Interest
will be charged on any payments received by the Inland
Revenue after this date)
-
May 19 - The payroll form P35 and P14's
must be filed by this date - employers late in filing
this form may receive a penalty.
-
May 31 - Last day for giving form P60
to your employees who were employed by you at the 5 April
2005.
-
July 6 - Last day for giving employees
a copy of the form P9D/P11D. These forms set out details
of any benefits in kind which you have provided for your
employees during the tax year ending 5 April 2005. This
is also the last day for filing form P11D(b) with the
Revenue - this is the return that sets out the amount
of Class 1A NIC's due for the year to 5 April 2005. Penalties
will be charged for returns filed after the 19 July.
For those clients who use our payroll bureau service, all
of this compliance filing will be dealt with as part of the
service we provide. For those contacts and clients who look
after their own year end payroll filing, please get in touch
if you would like any practical help or guidance.
Civil Partnerships
From 5 December 2005 same-sex couples can choose to be treated
as married couples for tax purposes.
If an election is made under the provisions of the Civil
Partnership Act 2004 same sex couples will achieve a legal
status to be known as a Civil Partnership.
Essentially the parties to a Civil Partnership will benefit,
or suffer, from the following married couple tax advantages
and disadvantages.
(Bullet points prefixed by "-" denotes a disadvantage, prefixed
by "+" denotes an advantage)
Capital Gains Tax.
- partners will qualify for just one principal private
residence.
+ no gain no loss treatment on disposals between partners
of chargeable assets.
Inheritance Tax.
+ partners will qualify for a spousal exemption -
transfers of property from one partner to the other on the
first death will be totally exempt for Inheritance Tax purposes.
Settlements.
- partners will be subject to a tax charge if they
try and transfer income from a higher rate taxpayer to a
lower rate taxpayer.
Stamp Duty and Stamp Duty Land Tax
+ partners who dissolve their Civil Partnership will
qualify for the exemption offered to married couples when
a marriage is dissolved. i.e. certain transfers of shares
and property can be made without a stamp duty or stamp duty
land tax charge.
Child Tax Credit.
- same-sex couples can presently base a child tax
credit application on the sole income of the applying partner.
If the same couple make an election for a civil partnership
to apply, both incomes will be taken into account in a child
tax credit application.
Payroll - electronic filing year end 5 April 2005
Please don't forget that employers with more than 250 employees
must file their year end payroll returns electronically.
Smaller employees with less than 50 employees have until
the year ending 5 April 2010 to sort out electronic filing.
There are financial incentives which the Revenue are offering
to firms who register early for e-filing.
Interestingly there is a provision in the 2005 budget which
denies these incentive payments to firms who are simply registering
to claim the cash payment. We shall have to see how these
restrictions are applied in practice!
If you need help with any online filing issue please call.
Tax Diary April/May 2005
1 April 2005 - Due date for corporation
tax due for the year ending 30 June 2004.
19 April 2005 - Last date to pay any outstanding
PAYE and Class 1 NICs for 2004/05 to the Revenue. (If you
pay your tax electronically the due date is 22 April 2005).
1 May 2005 - Due date for corporation tax
due for the year ending 31 July 2004.
19 May 2005 - PAYE and NIC deductions due
for month ending 5 May 2005. (If you pay your tax electronically
the due date is 22 May 2005)
31 May 2005 - Ensure all employees have
been given their P60s.
(For a full list of the payroll filing deadlines for the
next 4 months please see separate article - "Payroll - avoiding
penalties and interest payments")
Summing Up
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Summing Up - PLEASE NOTE: The ideas shared with you in this
email are intended to inform rather than advise. Taxpayers
circumstances do vary and if you feel that tax strategies
we have outlined may be beneficial it is important that you
contact us before implementation. If you do or do not take
action as a result of reading this newsletter, before receiving
our written endorsement, we will accept no responsibility
for any financial loss incurred.
