Spring has arrived in the UK, and along with longer sunny evenings and flowers coming into bloom, the Government has released it's Spring Statement 2022. Many of the announcements are in response to rising cost of living/fuel prices/energy bills. We have rounded up the key tax highlights. Income Tax and National Insurance Contributions (“NICs”) From July 2022, for Class 1 and Class 4 NICs, the National Insurance Primary Threshold and Lower Profits Limit will increase from £9,880 to £12,570, aligning them with the personal allowance for income tax. It is estimated that this will save a ‘typical’ employee over £330 in the year from July. From April 2022, self-employed individuals with profits between the Small Profits Th...

The 31 January 2022 deadline for taxpayers to file their 2020/21 tax returns is quickly approaching. In light of this, HMRC announced on 6 January 2022 that late filing and late payment penalties will be waived for one month for Self Assessment taxpayers who are yet to submit their 2020/21 tax returns. The announcement was made as a result of the extra pressures taxpayers and their agents are facing this year with COVID-19. HMRC have acknowledged that COVID-19 could be affecting some taxpayers’ ability to file their tax returns by the 31 January deadline. Although, official HMRC department figures at the date of the announcement show that out of the 12.2 million taxpayers who are required to submit a tax return, nearly 6.5 million t...

When it comes to the UK tax system, HMRC impose various penalties to ensure compliance and to encourage taxpayers to file their tax return by the 31 January deadline following the end of the tax year (or 31 October for paper returns). The penalties for missing the tax return filing deadline can be punitive, with HMRC also issuing the following penalties in relation to tax returns: For the late payment of tax; Failure to notify penalty, where a new source of taxable income or capital gains are received; Errors or inaccuracies on the return; Failing to keep sufficient records. Penalties for Late Filing of Tax Returns HMRC issue standard penalties for failing to submit your tax return on time, whereby these penalties ap...

Shares and granting share options are often provided to motivate and retain key employees but there are often circumstances such as where shares are provided to family and friends for a domestic purpose. The recent case of Vermilion Holdings Ltd v HMRC [2021] CSIH 45 highlights the importance of considering whether shares are received ‘by reason of employment’ as this can have tax consequences. Securities and Securities Options The rules regarding receiving shares ‘by reason of employment’ govern both securities and securities options. The definition of ‘securities’ under legislation includes shares, rights under a contract of insurance (other than excluded contracts of insurance), debentures, debenture stock, loan stock,...

For those who rely on travelling between countries to perform their everyday employment duties, COVID-19 has caused even more uncertainty and disruption to their travel plans than the rest of the population. If your movements for work have been impacted by COVID-19 with travel restrictions preventing you from leaving the UK, the following article should help provide clarity on your liability to UK income tax on your earnings. Non-UK Residents HMRC have acknowledged that instances arise where a non-UK resident is restricted from leaving the UK due to COVID-19, and consequently carries on working in the UK unexpectedly. With the above in mind, HMRC’s guidance states that the UK will not tax the employment income of a non-UK residen...

As an employer, there are numerous ways that you can remunerate or reward your employees and encourage their ongoing commitment to the business or company. Such rewards can be monetary, the provision of some form of benefit, or the gift or transfer of an asset. However, care should be taken when considering such "rewards" or "gifts" as in many cases they are likely to be deemed to be earnings and therefore subject to tax and/or National Insurance Contributions (NICs). Recent Case In the recent case of Mullens v HMRC (TC08112),  Mr Mullens (the taxpayer) sought to persuade the First-tier Tribunal (FTT) that huge payments he received from Bernie Ecclestone’s businesses, as well as from Ecclestone’s ex-wife and trusts, were gifts...

What is Domicile? Domicile is a concept of common law in the UK and each individual has only one domicile. Many people are unsure as to what this nebulous concept means; it is not the same as nationality, residence, or citizenship. Your domicile status is best defined as the country where your ‘homeland’ is, whereby the country in which you have a permanent home and where you plan to live indefinitely are two of the predominant contributing factors in determining this. Why is Domicile Important? Many people are internationally mobile; therefore, domicile helps to establish which UK tax rules are applicable to these individuals. The legal system where you are considered to be domiciled works alongside your residence status to ...

Following yesterday’s cancellation of the proposed autumn budget, the Chancellor of the Exchequer Rishi Sunak spoke in Parliament today (24.09.20) to address the next phase of the Government’s economic support during this crisis, dubbed their ‘Winter Economy Plan.’ The chancellor began his speech on a positive note, stressing that the UK is in a better economic position than in March, however he emphasised the need for more financial provisions to accompany the realisation that the virus will remain prevalent for months to come. The measures outlined today can be summarised as follows: 1. Jobs Support Scheme (JSS) The JSS will replace the furlough scheme (officially known as the Coronavirus Job Retention Scheme) ...

The recent First Tier Tribunal (“FTT”) case of Szymusik v HMRC [2020] raised some interesting questions about the eligibility criteria for claiming Seafarers’ Earnings Deduction (“SED”) – But what is SED? And who can claim it? This article will answer these questions, whilst also discussing what we can learn from Szymusik’s case. What is Seafarer’s Earnings Deduction?  The SED is an amount which employed seafarers can deduct from their employment earnings when calculating their UK tax liability - it is not available to seafarers who are self-employed. Who can claim it? In relation to the SED, a seafarer is someone whose employment consists of the performance of duties on a ship, including tasks which are incid...

The Coronavirus pandemic has not only endangered the health of the UK, but it has also had a huge impact on the economy. This financial strain has led to many people choosing to give up/use some of their income to support: 1) Businesses or employers; or 2) Charities. But what are the tax implications of these acts of generosity? Supporting a business or an employer People are showing support for a business or an employer in several ways such as: 1) waiving salary or bonuses before they are paid; 2) waiving dividends; or 3) giving salary or bonuses back to a business or employer after they have been paid. The tax treatment of this support depends on which route is taken (i.e. 1, 2 or 3). 1. Waiving salary or bonuses before they are...