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The latest group to come under scrutiny from HMRC are those individual taxpayers who are earning a second untaxed income.
As a precursor, the HMRC have launched the Second Incomes Campaign that provides the opportunity for any employed taxpayer who is resident in the United Kingdom and who has additional untaxed income to bring their tax affairs up-to-date.
Essentially, any payment an individual receives either from the provision of services or for trading in goods is taxable income.
Most frequently the source of a second income is from one of the following categories:
– consultancy fees – for instance for the provision of training or IT support.
– payments for organising parties or events.
– providing services such as taxi driving, hairdressing or fitness training.
– the making and selling craft wares.
– trading goods at market stalls, car boot sales or online platforms.
On this last category, it is important to emphasize that selling personal possessions is not deemed to be trading. However, it can be difficult to judge where the break point is. As a result, we have added ‘Are You Trading?’ into our Guide section at https://cooperfaure.co.uk/are-you-trading/.
If you are earning income in any of the above areas that is not being taxed at source and is not already being declaring in your Self-Assessment Tax Return, the HMRC is urging you to make a Voluntary Disclosure.
As an incentive, the HMRC is offering preferential terms through their Second Incomes Campaign which will reduce the level of penalties applied.
The first step is to submit a Notification Form that you wish to participate in the campaign. Thereafter, you will have four months to submit a Disclosure Form and to pay the amount due.
There is also the possibility to negotiate an extended payment term during this four month period.
The risk of not making a Voluntary Disclosure is that, should the HMRC find out that you owe tax, they will levy substantial penalties and, potentially under new powers in the 2014 Finance Bill, will be able to seize the money owed directly from your bank account.
At CooperFaure, we have extensive knowledge of personal tax matters. If you are unsure as to whether you have a second income or have any questions on your circumstances, please contact email@example.com to arrange a free consultation.
The economic downturn has led to more and more people using online auction websites, car boot sales or market stalls to sell items.
This does not automatically mean that you are trading and would, therefore, need to be registered for tax and, possibly, VAT. However, it can difficult to identify the point where trading starts.
As a rule, the HMRC would consider you to be trading if the following conditions apply:
– you want to make a profit.
– you have bought items to sell them on.
– you sell items often or regularly.
– you register as a business seller on an internet auction site.
– you sell from a market stall.
– you buy items wholesale or through trade suppliers.
– you change or improve items before selling them on.
– you sell items that you have just bought.
– you sell items that are related to another business that you run.
– you have borrowed money to pay for the items that you are selling and you have to repay the loan.
Generally, you would not considered to be trading if the following conditions apply:
– you only sell items to cover your costs.
– you sell a personal possession, something that you have been given or have inherited.
– you only make sales occasionally.
– you are not registered as an online shop or trader on an auction site.
– you make no changes or improvements to the items that you sell.
– you occasionally sell a personal possession that you have acquired or bought some time ago.
At CooperFaure, we have extensive knowledge of personal tax matters. If you are unsure as to whether you are trading or have any questions on your circumstances, please contact firstname.lastname@example.org to arrange a free consultation.
The ongoing steep increase in house prices is starting to cause a real concern that the UK economic recovery could be undermined.
The average marketed price of a property in London has risen by an astonishing £80,000 since the start of the year with the average price in the capital now exceeding £590,000 for the first time.
Across England and Wales as a whole, the marketed price is 8.9% higher than a year ago, at an average of just over £270,000, which is nearly at the growth level in autumn 2007 just before the crash.
Over the weekend, the governor of the Bank of England, Mark Carney, warned of “deep, deep structural problems” in the UK property market with the main problem being that not enough new homes were being built.
The fear of the effects of the potency of property price rises in London has led to calls for the Bank of England to intervene.
In addition, there is pressure on the government to modify the Help to Buy scheme by reducing the upper threshold of property value from the current level of £600,000.
Last night in a pre-emptive move, the largest mortgage lender in the UK that accounts for 20% of new mortgages, the Lloyds Banking Group announced that loans would be capped at four times the level of a borrower’s income for mortgages over £500,000. Previously, their lenders including Halifax, Cheltenham & Gloucester, Birmingham Midshires and the Bank of Scotland, had frequently lent at much higher income ratios, particularly in London.
Although the consistent low level of interest rates is chiefly cited as the main factor fuelling the property price boom, it is worth looking at the London borough with the largest increase in property prices over the last year, Tower Hamlets, which covers Canary Wharf.
In the last year, property prices have increased by 43% but this has been driven by investors buying in Canary Wharf and the surrounding areas. Moreover, around two-thirds of these have been purchased outright for cash with no mortgage.
There is a clear risk that these moves by the government and banks will open up the London property market further to investors rather than cooling the increase in prices and, as a result, the London bubble will continue.
If you would like more detailed guidance on the impact of these changes or have a specific question, please contact email@example.com to arrange a consultation.
The 2013-14 tax year ended on 5th April 2014 and the last date for submitting your tax return for this period is 31st January 2015.
As a result, the common natural instinct is not to even start thinking about this until after Christmas!
However, there are benefits from submitting your tax return early to HMRC.
If you are likely have tax to pay, the HMRC will be able to tell you how much. The payment deadline remains 31st January 2015 so there is the opportunity to set money aside for this over the upcoming months.
If you are likely to be due you a tax rebate, the HMRC will start processing the paperwork on receipt of your tax return.
For our clients, we operate an online portal to submit the Tax Return to HMRC which means we can confirm the amount of tax due to be paid or the tax rebate due as part of the process.
If a portion of your income is paid as an employee under PAYE, the date by which your employer must provide you with a P60 is 31st May.
Similarly, if you receive taxable benefits from your employer, the date by which they must provide you with a P11D is the 6th July.
For the companies where we administer the payroll, the 2013-14 P60s have already been issued and we will be preparing and distributing the P11Ds, if applicable, later this month.
Tomorrow we will be emailing our clients with details of the additional information required and the proposed fees for this service.
However, if you are unsure as to whether you need to complete a tax return or have a specific question, please contact firstname.lastname@example.org.