Gary Perrins, from TaxAssist Sudbury & Colchester, answer four of your most common accountancy questions
Transferring my personal allowance
"Am I right in thinking that I will soon be able to transfer my personal allowance to my husband?"
In Budget 2014, it was announced that from April 2015 a spouse or civil partner may transfer up to £1,050 of their personal allowance to their spouse/civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate.
Therefore, the use of this measure is restricted, but it can provide a benefit where one spouse or civil partner has an income less than their personal allowance (this will be £10,500 for the majority of people in 2015/16).
At the date of publishing, no announcement had been made as to how the election would be made. But the lead proposal put forward is that one party will apply on-line to transfer the allowance to their spouse or civil partner and HMRC will notify the recipient about the subsequent change to their tax code
What happens when you cancel a tax return?
"HMRC issued a tax return for me but my circumstances have changed so I didn’t think it was required. I successfully asked for it to be cancelled, but what happens to the accompanying penalties?"
In the past, HMRC was required to raise a penalty for a late tax return- although the taxpayer was able to appeal if they felt they had grounds.
However, from April 2012 taxpayers have been able to ask HMRC to cancel a return where they felt it was not required. Where HMRC are agree, any penalties linked to the return, were also cancelled.
This can apply to individual, partnership or trust returns, but please note this only applies to 2012/13 tax returns onwards.
If you would like any assistance in cancelling a tax return, appealing a penalty or generally managing your tax affairs, please feel free to contact us and we will put you in touch with your local office.
Consequences of paying tax late
"I am newly self-employed and have been rather disorganised this year. I just managed to get my 2013/14 tax return filed online on 31st January 2015, but I didn’t have enough cash put aside for my tax bill. What are the implications of paying my tax late?"
You will have interest to pay on anything you owe until HM Revenue & Customs (HMRC) receives your payment).
Furthermore, after a delay of 30 days, late payment penalties at 5% of the tax you owe will begin to apply. Additional late payment penalties will be added if the delay exceeds 6 months.
Please note, if you also registered for self assessment late (i.e. after 5th October 2014), you may also incur a Failure to Notify penalty. This will be 5% of any tax outstanding on 31st January 2014.
Gary will be happy to assist you with your affairs, from helping with the day-to-day bookkeeping, to completion of your accounts and tax return. We’ll also ensure that you’re claiming everything you’re entitled to and obtaining as much tax relief as possible. Please call us free to find out more.
National Insurance for young employees
"I am thinking about taking on a school leaver. Am I right in saying that there has been a change with regards to their National Insurance?"
The current rate of secondary Class 1 National Insurance contributions for the tax year 2014 to 2015 is 13.8% on earnings above the Secondary Threshold (ST) of £153 per week.
From 6th April 2015 that rate is reduced to 0% for those employees who are over 16 and under 21, with earnings between the Secondary Threshold and the Upper Secondary Threshold. For 2015/16, the Upper Secondary Threshold will be the same as the Upper Earnings Limit.
Employees won’t see any reduction in their payments and will continue to pay National Insurance contributions through their salary as normal. Their entitlement to contributory social security benefits, including State Pension won’t be affected. But they may notice a change to the National Insurance category letter recorded on their payslip.
It’s employers who will benefit from this change, as they may not pay any secondary National Insurance on the young employees that qualify.
If you'd like any support with your payroll, please contact Gary on 01787 699 141
Member since: 17th March 2014
Hello! I'm Penny from thebestof Sudbury, shouting about the best local businesses from Hadleigh through the Clare. When I'm not doing that, you'll find me knitting socks or tending to my 6 chickens