UK citizens who own homes in France may have to pay substantially more in tax in that country, under proposals announced last week.
Capital gains tax, and income tax on rental income, will rise substantially for foreigners, to levels paid by French citizens.
Several hundred thousand UK citizens own, and let, homes in France.
At the moment, French capital gains tax is levied on the sale of a home at 19%, plus 15.5% as a "social charge" to pay for state benefits.
Likewise, tax on rental income is levied at 20% plus 15.5% social charge.
The social charges are not currently paid by foreigners who own homes in France, but under latest plans, they will be.
The extra taxes have been outlined in a supplementary budget which should become law by the end of July, and which will apply immediately.
It is possible the extra taxes to be paid by foreigners may be challenged legally.
Nevertheless, it is thought that the moves will inevitably make second homes and rental properties in France far less attractive to UK residents.
Friday, 13 July 2012
Thursday, 12 April 2012
2012 Budget - The Aftermath
The facts below are extracts taken from a wide variety of professional & trade press articles following the Budget of Chancellor George Osborne. The proposals set out within the Budget speech will be ratified in due course through The Finance Act 2012 although some measures were introduced as part of the previous announcements.
In most peoples opinions it is probably fair to say that when the cosmetic appearance was stripped away, the 2012 Budget was somewhat neutral overall. There are certain areas which have caused controversy and others which have caused comedy. 2012 will in our view always be remembered as the Pasty, Pie & Pensioners Budget.
When the country is looking to emerge from an economic recession, are we really employing civil servants with the sole aim of further complicating already complex VAT legislation against a background of a Parliament keen to reduce red tape & encourage business entrepreneurship? Moreover are we concerned whether Mr Osborne has ever eaten a sausage roll from Greggs?
Income Tax rates were almost a non event as they were announced in 2011. A 5% drop in the higher 50% rate was announced but only effective from April 2013.
For Inheritance Tax purposes there was no change in limits but a 4% tax discount will be applied if the estate is over £325,000 & over 10% is left to a registered charity. A nice idea given that charitable donations have been hit by the recession but for higher rate tax payers who are minded to give to charity anyway, a lifetime donation would seem to have more benefit.
Various Benefits including State Pension & Jobseekers Allowance are increased in line with the Consumer Price Index set in September 2011 at 5.2%. Pensioners however are still mainly affected by the low rates of investment returns which affect their day to day lives and were planned to top up pensions through retirement.
The most controversial change in this area was in respect of Working Tax Credit where couples with children must work 24 hours per week instead of 16 hours and that one person must work at least 16 hours. We believe that this will have a short term impact upon businesses who have arranged part time staffing around the original rules and may now face employee requests to change their hours. Failure of an SME employer to be able to respond could see increasing movement of employees with the consequent associated costs.
On the periphery of the Budget, businesses are still struggling to obtain finance from a banking system which claims to be releasing credit in line with expectations. Whose expectations these are we cannot say as in the SME sector it is fairly clear that banks are only lending where the level of security available not only from the business but from owners personal guarantees is up to 4x the amount of borrowings. Suffice to say that Government statistics announced on 11 April showed that British firms were not investing in capital which would enable them to pull clear of recession & that they might struggle to do so. – If they cannot borrow to invest then perhaps the idea of a nationally owned business bank is the way forward? We still see banks visiting businesses, not to lend money but to sell Life Assurance & Pensions.
Finally it is worth commending our Chancellor on his astute awareness of the tax system over which he has stewardship. As recorded in an interview with the Daily Telegraph:
“Chancellor George Osborne has expressed shock after looking at 20 anonymised tax returns of multi-millionaires which demonstrated they have exploited tax loopholes to legally reduce their tax bills.”
In most peoples opinions it is probably fair to say that when the cosmetic appearance was stripped away, the 2012 Budget was somewhat neutral overall. There are certain areas which have caused controversy and others which have caused comedy. 2012 will in our view always be remembered as the Pasty, Pie & Pensioners Budget.
When the country is looking to emerge from an economic recession, are we really employing civil servants with the sole aim of further complicating already complex VAT legislation against a background of a Parliament keen to reduce red tape & encourage business entrepreneurship? Moreover are we concerned whether Mr Osborne has ever eaten a sausage roll from Greggs?
Income Tax rates were almost a non event as they were announced in 2011. A 5% drop in the higher 50% rate was announced but only effective from April 2013.
For Inheritance Tax purposes there was no change in limits but a 4% tax discount will be applied if the estate is over £325,000 & over 10% is left to a registered charity. A nice idea given that charitable donations have been hit by the recession but for higher rate tax payers who are minded to give to charity anyway, a lifetime donation would seem to have more benefit.
Various Benefits including State Pension & Jobseekers Allowance are increased in line with the Consumer Price Index set in September 2011 at 5.2%. Pensioners however are still mainly affected by the low rates of investment returns which affect their day to day lives and were planned to top up pensions through retirement.
The most controversial change in this area was in respect of Working Tax Credit where couples with children must work 24 hours per week instead of 16 hours and that one person must work at least 16 hours. We believe that this will have a short term impact upon businesses who have arranged part time staffing around the original rules and may now face employee requests to change their hours. Failure of an SME employer to be able to respond could see increasing movement of employees with the consequent associated costs.
On the periphery of the Budget, businesses are still struggling to obtain finance from a banking system which claims to be releasing credit in line with expectations. Whose expectations these are we cannot say as in the SME sector it is fairly clear that banks are only lending where the level of security available not only from the business but from owners personal guarantees is up to 4x the amount of borrowings. Suffice to say that Government statistics announced on 11 April showed that British firms were not investing in capital which would enable them to pull clear of recession & that they might struggle to do so. – If they cannot borrow to invest then perhaps the idea of a nationally owned business bank is the way forward? We still see banks visiting businesses, not to lend money but to sell Life Assurance & Pensions.
Finally it is worth commending our Chancellor on his astute awareness of the tax system over which he has stewardship. As recorded in an interview with the Daily Telegraph:
“Chancellor George Osborne has expressed shock after looking at 20 anonymised tax returns of multi-millionaires which demonstrated they have exploited tax loopholes to legally reduce their tax bills.”
Wednesday, 21 March 2012
HMRC Relents on Multiple P35 Penalties
HMRC has agreed a new approach to PAYE late filing penalties with professional tax bodies to lessen the number of companies receiving notices for £400+ fines in September each year.
As part of its initiative to improve service standards, the tax department worked with the bodies to tackle some of the most aggravating issues, one of which was the way companies were hit by hefty fines out of the blue.
The issue has become increasingly sensitive as tribunals have taken to dismissing penalty levies where the judge thinks HMRC's approach amounts to revenue-raising rather than enforcing the deadline, as documented during the past year in AccountingWEB's Reasonable Excuse scorecard.
To encourage employers to comply with the 19th May PAYE filing deadline, Taxation reported a statement from HMRC and the tax bodies which said it will undertake to:
As part of its initiative to improve service standards, the tax department worked with the bodies to tackle some of the most aggravating issues, one of which was the way companies were hit by hefty fines out of the blue.
The issue has become increasingly sensitive as tribunals have taken to dismissing penalty levies where the judge thinks HMRC's approach amounts to revenue-raising rather than enforcing the deadline, as documented during the past year in AccountingWEB's Reasonable Excuse scorecard.
To encourage employers to comply with the 19th May PAYE filing deadline, Taxation reported a statement from HMRC and the tax bodies which said it will undertake to:
- Change the notification date for 2011/12 P35 annual returns from mid-February to mid-March 2012, so that employers will receive it much nearer to the end of the tax year.
- Annual return reminders will be sent out from 28th April 2012, where HMRC thinks there are outstanding P35s for the year.
- From 31st May 2012, HMRC will introduce a "P35 Interim Penalty Letter" that will go to employers within a month of the filing deadline. The letter will tell employers they have incurred a late return penalty and explain what to do to avoid it increasing.
- Improve online guidance for submitting P35s online, including specific advice about the test-in-live service to reduce the number of employers who believe their test submission is the live submission. "The on-screen messages within the HMRC online product will also make it much clearer that even when a successful test transmission has been made, a live transmission is still required.
- Instruct Employer Helpline staff to tell employers about filing dates when setting up new employer schemes, to help them avoid a penalty.
- For next year, improve the information on the P35 and the reminders to include a warning that the first penalty notice will cover four months.
Monday, 19 March 2012
VAT and the Channel Islands
Attempts to stop the introduction of more stringent VAT rules on low value goods sent from the Channel Islands have been averted.
The Chancellor had announced last November the removal of the Low Value Consignment Relief (LVCR), which had allowed goods shipped from the Channel Islands worth less than £15 to ship VAT free.
Its abolition, from 1st April, was challenged by the Jersey and Guernsey governments, which said the move was discriminatory and illegal.
However, Law Lord Mr Justice Manning said the Treasury was within its rights to end the relief.
"This is a victory for common sense in what has become something of a case of David v Goliath," said Forum of Private Business senior policy adviser, Phil McCabe. "But the judiciary has today reaffirmed what George Osborne said in November, that LVCR is tax abuse and avoidance, plain and simple, and has to stop."
"Unfortunately it is too late for countless small firms which went to the wall, unable to compete with giants such as Amazon and Tesco, who have been able to unfairly use this loophole to avoid paying billions in tax and undercut their small rivals by significant margins."
"Had the government's decision been overturned there would have been serious consequences for high streets across the UK."
The real question is now whether the big companies will put up their prices by 20% or whether they will absorb the cost in the short term.
The Chancellor had announced last November the removal of the Low Value Consignment Relief (LVCR), which had allowed goods shipped from the Channel Islands worth less than £15 to ship VAT free.
Its abolition, from 1st April, was challenged by the Jersey and Guernsey governments, which said the move was discriminatory and illegal.
However, Law Lord Mr Justice Manning said the Treasury was within its rights to end the relief.
"This is a victory for common sense in what has become something of a case of David v Goliath," said Forum of Private Business senior policy adviser, Phil McCabe. "But the judiciary has today reaffirmed what George Osborne said in November, that LVCR is tax abuse and avoidance, plain and simple, and has to stop."
"Unfortunately it is too late for countless small firms which went to the wall, unable to compete with giants such as Amazon and Tesco, who have been able to unfairly use this loophole to avoid paying billions in tax and undercut their small rivals by significant margins."
"Had the government's decision been overturned there would have been serious consequences for high streets across the UK."
The real question is now whether the big companies will put up their prices by 20% or whether they will absorb the cost in the short term.
Monday, 5 March 2012
Staff Using Social Network sites
ACAS have just issued new guidance to assist employers with this increasingly thorny problem.
It is now widely accepted that staff no longer need an employer's PC Network to access social media sites. The emergence of many and varied mobile devices means that employers no longer have control regarding access to such sites during the working day. This can lead to time lost or at worst, the posting by staff of inappropriate comments about colleagues.
The latest guidance deals with a list of issues, dangers and benefits and then advises the appropriate way forward.
www.acas.org.uk/index.aspx?articleid=3381
It is now widely accepted that staff no longer need an employer's PC Network to access social media sites. The emergence of many and varied mobile devices means that employers no longer have control regarding access to such sites during the working day. This can lead to time lost or at worst, the posting by staff of inappropriate comments about colleagues.
The latest guidance deals with a list of issues, dangers and benefits and then advises the appropriate way forward.
www.acas.org.uk/index.aspx?articleid=3381
Friday, 2 March 2012
Inheritance Tax Planning
The current tax year comes to an end in a little over one months time. Don't overlook some simple planning points on Inheritance Tax.
Basically the 7 year gifts rule applies, where any gifts made fall completely out of Inheritance Tax charge after that time has passed.
Put simply, if your estate would have been worth £425,000 today had you not gifted £100,000 7 years ago, then instead of being liable for a £40,0000 IHT charge, the whole estate now worth £325,000 is tax free.
If you have the ability to make gifts and your estate is likely to exceed £325,000, then it is always worth considering making £3,000 worth of gifts each tax year which are tax free.
Assuming that a married couple are able, and of course wish to, use the annual exemption, it is worth remembering that they each have £3,000 to utilise which can save £2,400 per annum in potential IHT.
There are also separate small gift exemptions of up to £250 per recipient and gifts upon marriage of up to £5,000.
Finally, always keep a note of any gifts and preferably retain it with your copy Will. Oh you haven't made a Will yet? Memo to self then - make arrangements to have one drawn up.
Basically the 7 year gifts rule applies, where any gifts made fall completely out of Inheritance Tax charge after that time has passed.
Put simply, if your estate would have been worth £425,000 today had you not gifted £100,000 7 years ago, then instead of being liable for a £40,0000 IHT charge, the whole estate now worth £325,000 is tax free.
If you have the ability to make gifts and your estate is likely to exceed £325,000, then it is always worth considering making £3,000 worth of gifts each tax year which are tax free.
Assuming that a married couple are able, and of course wish to, use the annual exemption, it is worth remembering that they each have £3,000 to utilise which can save £2,400 per annum in potential IHT.
There are also separate small gift exemptions of up to £250 per recipient and gifts upon marriage of up to £5,000.
Finally, always keep a note of any gifts and preferably retain it with your copy Will. Oh you haven't made a Will yet? Memo to self then - make arrangements to have one drawn up.
Thursday, 1 March 2012
Walker Thompson Newsletter 53
Please click on any of the headings below for more information about each subject.
ONLINE VAT RETURNS
From April 2012, businesses (with very few exceptions) will have to file their VAT Returns online and pay their liability electronically. If you are not already online, now is the time to set it up.
EU COOKIES
The Information Commissioner’s Office (ICO) has published guidelines on the business use and storage of cookies.
PENSIONS AUTO ENROLMENT DATES DEFERRED FOR SMALLER EMPLOYERS
The timetable for the introduction of Pensions Auto Enrolment has been revised for smaller employers.
NEW APPROACH TO RECORDS CHECKS FROM HMRC
HMRC have announced that they intend to make changes to their business records checks programme following a review of the pilot scheme.
PAY UP ON TIME
A new guide ‘Get Paid!’ has been published. The guide which is aimed at smaller businesses contains tips and advice from both suppliers and customers. The guide covers advice on invoicing and developing a robust credit policy.
HMRC LATEST TARGETS
HMRC have announced that they will turn their attention to those involved in home improvement trades and direct selling (online market sellers) in their next round of Tax Catch Up Plans.
CLEAN UP YOUR PAYROLL DATA
HMRC have launched a new online video to help employers reduce the problems caused by inaccurate employee data.
SELF ASSESSMENT STATISTICS
According to HMRC a record 9.45 million self assessment tax returns were filed on time this year and a record 7.65 million (80.9% of them) were filed online.
BUDGET FOR GROWTH
The CBI is calling for a Budget to help businesses. To read more information on the CBI’s recommendations visit the link below.
PENALTIES FOR FAILING TO FILE PAYROLL FORMS ONLINE
HMRC have confirmed in the latest Employer Bulletin that they intend to impose penalties on all employers who fail to send their payroll starter and leaver forms online from April 2012.
ONLINE VAT RETURNS
From April 2012, businesses (with very few exceptions) will have to file their VAT Returns online and pay their liability electronically. If you are not already online, now is the time to set it up.
EU COOKIES
The Information Commissioner’s Office (ICO) has published guidelines on the business use and storage of cookies.
PENSIONS AUTO ENROLMENT DATES DEFERRED FOR SMALLER EMPLOYERS
The timetable for the introduction of Pensions Auto Enrolment has been revised for smaller employers.
NEW APPROACH TO RECORDS CHECKS FROM HMRC
HMRC have announced that they intend to make changes to their business records checks programme following a review of the pilot scheme.
PAY UP ON TIME
A new guide ‘Get Paid!’ has been published. The guide which is aimed at smaller businesses contains tips and advice from both suppliers and customers. The guide covers advice on invoicing and developing a robust credit policy.
HMRC LATEST TARGETS
HMRC have announced that they will turn their attention to those involved in home improvement trades and direct selling (online market sellers) in their next round of Tax Catch Up Plans.
CLEAN UP YOUR PAYROLL DATA
HMRC have launched a new online video to help employers reduce the problems caused by inaccurate employee data.
SELF ASSESSMENT STATISTICS
According to HMRC a record 9.45 million self assessment tax returns were filed on time this year and a record 7.65 million (80.9% of them) were filed online.
BUDGET FOR GROWTH
The CBI is calling for a Budget to help businesses. To read more information on the CBI’s recommendations visit the link below.
PENALTIES FOR FAILING TO FILE PAYROLL FORMS ONLINE
HMRC have confirmed in the latest Employer Bulletin that they intend to impose penalties on all employers who fail to send their payroll starter and leaver forms online from April 2012.
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