Tax Newsletter February 2011
Just two months to the end of the current tax year, so this month we have included articles regarding changes to the tax system that we know will be included in the March 2011 Budget; the Budget date is already announced, 23 March 2011. We have also included some brief details of the changes to the pension legislation.
Our next newsletter will be published Tuesday 3 March 2011.
Changes to Pension Legislation
There are significant changes to pension legislation being introduced, some of which take effect on 6 April 2011.
If you are likely to be drawing benefits from your pension scheme in the next few years, are current taking benefits, or considering making a large lump sum contribution then you may be affected by the changes and should consult your independent financial advisor for advice.
If you don’t already have an independent financial advisor and would like to speak to someone please contact us.
Employer related childcare (ESC) - loss of higher rate tax benefits
There are two changes to the present ESC scheme that currently allow employees to receive qualifying childcare vouchers up to a value of £55 per week.
The changes from 6 April 2011 are:
- Currently employees receiving the National Minimum Wage (NMW) cannot legally reduce their earnings, a salary sacrifice, to take part in an ESC arrangement. This has prevented some employers offering the scheme as it has to apply to all employees. HMRC have now agreed that employees earning at NMW rates can be withdrawn from the scheme and ESC offered to non NMW workers. This amendment will be back dated to apply from 2005/06 when the scheme was introduced.
- Employees joining schemes on or after 6 April 2011 will have their tax relief equalised such that higher rate tax payers gain no additional benefit. The new weekly amounts will be: Basic rate taxpayers £55 (no change), Higher Rate taxpayers £28, and Additional Rate taxpayers £22.
Planning point
If you are a higher rate or additional rate taxpayer and you have not joined your employer's ESC scheme you may want to reconsider. Individuals in a scheme at 6 April 2011 will retain their existing level of tax relief.
Furnished Holiday Lets - end of loss relief flexibility
At present owners of qualifying Holiday Let property can set off losses from the letting activity against their other earnings. From 6 April 2011 you will no longer be able to do this. From 6 April 2011 you will only be able to carry losses forwards to set off against future holiday let profits.
From a tax planning point of view this offers a short window of opportunity. Any Furnished Holiday Let losses that you make up to 5 April 2011 can be set off against other earnings for 2010-11. This could be an opportunity not to miss as higher rate and additional tax rate payers may receive 40% or 50% of the losses from HMRC as tax refunds.
If you are planning extensive, qualifying repairs to your FHL property(ies) now may be a good time to implement and complete before 5 April 2011.
If you would like advice regarding this topic please call for more information.
VAT on certain postal services from 31 January 2011
Although the First and Second Class postal rates are unaffected, as are franked mail and standard parcels, there are a number of postal services that will include VAT from 31 January 2011. These include:
Express and tracked services
- Special delivery 9am, stamp, franking and account customers.
- Special delivery next day, account customers only.
- Royal Mail tracked and tracked next day
- Royal Mail Same Day
International Services (EU destinations only)
- International contract services
- International Airsure
- International Admail and Admail Packets
- International redirections
Advertising, Catalogues and Magazine services
- Big Book
- Royal Mail Heavyweight
- Mail Media
Unaddressed Mail
- Door to Door
If you are a business user of these services you should be able to reclaim the VAT. However businesses that use these postal services who are not VAT registered or have Exempt Services may have to absorb the 20% VAT increase.
Tax Diary February/March 2011
1 February 2011 - Due date for corporation tax payable for the year ended 30 April 2010.
19 February 2011 - PAYE and NIC deductions due for month ended 5 February 2011. (If you pay your tax electronically the due date is 22 February 2011)
19 February 2011 - Filing deadline for the CIS300 monthly return for the month ended 5 February 2011
19 February 2011 - CIS tax deducted for the month ended 5 February 2011 is payable by today.
1 March 2011 - Due date for corporation tax due for the year ended 31 May 2010.
19 March 2011 - PAYE and NIC deductions due for month ended 5 March 2011. (If you pay your tax electronically the due date is 22 March 2011)
19 March 2011 - Filing deadline for the CIS300 monthly return for the month ended 5 March 2011.
19 March 2011 - CIS tax deducted for the month ended 5 March 2011 is payable by today.
DISCLAIMER - 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.