If you have recently received a PAYE coding notice from HMRC, you may be wondering what it means and what you should do with it. This can be a complex topic, and if you are confused you are certainly not alone. Therefore, the aim of this blog is to help you to understand your coding notice and any actions that you may need to take. PAYE Firstly, PAYE stands for “Pay As You Earn” and is the system that is used by your employer to deduct tax directly from your wages or salary. In order to ensure that your employer deducts the correct amount of tax, HMRC issues a PAYE code to your employer (and to you through a coding notice) to provide the relevant information. The PAYE coding notice essentially tells you your tax code and explains ...

What is a charity? In order for an organisation to be legally recognised as a charity in England and Wales, it must be: Established for "charitable purposes" only; and Be subject to the control of the High Court's charity law jurisdiction. 1. What is a "Charitable Purpose"? A charity will have a charitable purpose where it is set up to benefit society. Typical charitable purposes include: relieving poverty; advancing education; protecting the environment; advancing religion; animal welfare; and protecting human rights. An organisation will not have a charitable purpose where it has a political purpose, where the purpose is unlawful or against public policy, or intended to serve a non-charitable purpose. Furthermore, t...

HMRC’s position with regards to the taxation of of cryptocurrencies or cryptoassets (such as Bitcoin, XRP/Ripple, Ethereum) has been an evolving area, as the wide range of forms and uses of these assets can make it difficult to determine the nature of a transaction, and therefore how a transaction should be taxed. Previous guidance on the matter provided that the taxation of cryptoassets very much depended on the circumstances of the transaction in question. Whilst the same is still true, HMRC has recently issued more detailed practical guidance for individuals, which may provide more clarity going forward. What is a Cryptoasset? HMRC has confirmed that they do not consider cryptoassets to be currency or money. In a report undert...

The latest battle before the Court of Appeal (CoA) between a South African diver and HMRC has thrown up interesting questions about how far UK law can affect the interpretation of its double tax treaties with other countries. The CoA’s 2-1 judgement in favour of the diver overturned a previous decision in favour of HMRC by the Upper Turbinal and restores the decision of the First-Trier Tribunal (FTT). In light of the split decision, HMRC may try to appeal to the Supreme Court so taxpayers relying on the UK’s various “deeming” provisions for tax may wish to keep abreast of this case. Background Fowler was a South African diver working in the North Sea. Under a specific relief in the UK’s domestic tax law, income fr...

Often when making a donation, a charity will ask whether Gift Aid can be claimed on the donation. There are certain tax advantages and reliefs to making Gift Aid donations, which are explained in more detail below. Basic Operation of Gift Aid Gift Aid is a tax incentive that allows UK registered charities (and charities registered in other EU member states, Norway, Iceland, and Liechtenstein) to claim the basic rate tax (currently 20% in 2018/19) back on the donation from HMRC. For example: Assume a taxpayer wishes a charity to receive a total of £100. The taxpayer will actually give the charity £80 and the charity will then claim back the £20 from HMRC. Tax Relief – Higher Rate/Additional Rate Taxpayers Further tax reli...

The taxation of charities differs from that of other types of organisation. In addition to being subject to specific tax obligations, charities are also eligible for a number of tax reliefs. This blog will offer an insight into the obligations that exist, the reliefs that are available, and how to make a claim. What is a charity for tax purposes? According to HMRC, in order to be able to claim for tax relief a charity must be: Based in the UK, EU, Iceland, Liechtenstein, or Norway; Established solely for charitable purposes. HMRC defines this as being for the public benefit and relevant activities include education, saving lives, and relieving poverty; Registered with the Charity Commission or another regulator; and Run ...

Following a number of tribunal cases (including Mohammed Salem Kadhem v HMRC [2017]), HM Revenue & Customs has updated its official guidance on the circumstances when a director is required to submit a self-assessment tax return. Previously, HMRC has maintained that a director of a company was required to register for self-assessment and submit a tax return by virtue of holding office - even if there was no tax liability to report. However, following several defeats in the courts, HMRC has now confirmed that provided that you are subject to PAYE on your income and you have no further liability to tax, you will not be required to submit a tax return. It is important to note that if you receive dividends in excess of the dividend...

Further to our previous article Budget 2018: Entrepreneurs' Relief & Alphabet Shares (28/01/18), parliament has published an amendment to the Finance (No. 3) Bill in respect of the definition of a "personal company" for the purposes of Entrepreneurs' Relief. The effect of this change is that holders of alphabet shares will not be prevented from claiming Entrepreneurs' Relief solely on the basis that they are not entitled to 5% of the dividends declared. Under the amended legislation, a company will be your "personal company" provided that: You hold at least 5% of the ordinary share capital of the company By virtue of that holding, you hold at least 5% of the voting rights in the company, and Either or both of the fol...

In our previous blog Taxpayer Clears Hurdles for BPR on Livery Business (12 September 2018), we discussed the First-Tier Tribunal (“FTT”) case of The PRs of the Estate of Maureen W.Vigne (Dec’d) v HMRC. In this case, the courts found that the services provided to horse owners (such as providing horses with hay which was grown on the land and removing horse manure from fields, daily health checks of each horse, worming, etc.), in addition to the provision of land for grazing and stabling purposes, were sufficient for Business Property Relief (“BPR”) to be available. Consequently, this allowed part of the estate to benefit from 100% relief from inheritance tax. However, an appeal against this decision was made by HMRC to the U...

Whilst you may be entitled to a State Pension once you reach retirement age, you may wish to have additional funds in order to support you. Pension funds aim to provide you with a further source of income to draw on later in life and are oftentimes a tax-efficient way to save for your retirement. This is because not only can you receive tax relief on payments made into your pension, but growth within the pension is also tax free. With this in mind, please read on for our summary of the taxation of pension contribution. Maximum Contribution & "Relevant Earnings" Firstly, the maximum contributions you can personally make into your pension in a year is the greater of £3,600 and 100% of your "relevant earnings". Relevant ear...