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  • What sort of accounts do charities need to prepare?

    All charities, whether registered with the charity commission or not, must prepare a trustees’ annual report and accounts which must be available to the public on request.

    While some basic requirements apply to all charities, exactly what needs to be included in the accounts will depend on factors such as income, gross assets and charity constitution.

    Charities may prepare their accounts on either a receipts and payments basis, or an accruals basis. The method they use will depend on the income of the charity and whether or not it has been set up as a company.

    The simpler receipt and payments method can be adopted by non-company charities with a gross income of £250,000 or less. It consists of an account summarising all money received and paid out by the charity in the financial year, and a statement of its assets and liabilities at the end of the year.

    All charitable companies and non-company charities with gross income of over £250,000 in the accounting period must prepare their accounts on an accruals basis.  The accounts must contain a balance sheet, a statement of financial activities and explanatory notes and must comply with the SORP.

    For more information on preparing charity accounts get in touch with our charities team.

  • Why should I seek ‘Advance Assurance’ from HMRC?

    Both EIS and SEIS schemes are designed to attract funding to companies that are seen as higher risk investments. An advance assurance from HMRC gives potential investors confidence that the shares to be issued by the company should qualify for EIS/SEIS relief. This means their investment should receive the expected tax benefits as long as they themselves meet the EIS/SEIS requirements for an investor.

    Under these schemes, investors are committing their cash for a minimum of 3 years of in your company. Confirmation of your company’s eligibility for the scheme will help an investor to invest in your company rather than someone else’s.

    To receive advance assurance, you will need to provide information that enables HMRC to consider whether if:

    • your company can be expected to be a qualifying company
    • your company shares to be issued will be eligible shares
    • your company shares will be issued to raise money for a qualifying business activity
    • the money raised will be employed within 2 years of the shares being issued and only by companies which satisfy the rules of the scheme (not by other companies in the same group)

    It is important to provide all relevant information to HMRC to make sure your clearance application is sound. Tax reliefs can be withdrawn from EIS/SEIS investors if the company fails to meet certain conditions throughout its 3-year qualifying period.

    Do you still have questions? Get in touch with our tax team to find out more about how they can help you.

  • What is FATCA and who does it affect?

    The Foreign Account Tax Compliance Act (FATCA) is one of the governments measures to aid in the elimination of international tax avoidance. It was introduced to improve tax compliance by US citizens or those defined as ‘US Persons for tax purposes’.

    Whilst it is part of US legislation, the information exchange arrangements between the US and UK authorities mean that this is now also part of UK law. As such, it affects all UK entities which manage financial assets and accounts outside of the US including financial organisations, companies, professional practices and Trusts.

    This legislation is primarily concerned with US taxes, but even if you have no links to the US, you may still need to complete the requested declaration. There is nothing to worry about and we can help if you receive a notice to certify your status and advise you how to complete the forms.

    Do you still have questions? Get in touch with our tax team to find out how they can help you.

  • What are the responsibilities of an occupational pension scheme trustee?

    A trustee can be a person or a company who holds the assets of the pension scheme for its beneficiaries. The scheme assets are often held in a trust to keep them separate from the employer’s assets and so the scheme can benefit from particular tax reliefs.

    Pension scheme trustees play an important role in making sure that the scheme is run honestly, efficiently and in the best interests of its members.

    If you have been invited to be a pension trustee, you should fully understand the commitment you are making before you agree to take on the role. If something goes wrong with the pension scheme, trustees may be held personally liable for any loss caused.

    Trustees are expected to organise the training that they need to meet their responsibilities and keep their knowledge up to date. You will be expected to understand the law relating to pensions and trusts, scheme funding and investment of the assets of schemes, amongst other legal requirements.  You will also need a good understanding of certain pension scheme documents including the trust deed and rules, the statement of investment principles and the statement of funding principles.

    Trustees have a number of specific duties, including making sure that:

    Contributions are paid by the employer at the right level and right time.

    Benefits are paid to the relevant scheme members on time.

    Accounting records are full and accurate, including written records of trustees’ meetings.

    An annual report is available within seven months of the scheme year end.

    An auditor’s statement is obtained which confirms the details of the payment of contributions into the scheme.

    Scheme accounts are audited, if required.

    Pension funds are invested within the bounds of the relevant law and the scheme’s investment principles.

    Professional advisers are appointed as needed. Pension schemes can be complicated to run and trustees will require specialist advice to help them to make decisions on behalf of the members.

    Members are provided with information on the scheme and on their own benefits.

    The Pension Regulator (TPR) is provided with the legally required information for their register, an annual return for the scheme and its annual levy.

    We help pension trustees to meet their obligations by advising on the accounting and audit requirements of their scheme, and by providing independent audits.

    Do you still have questions? Get in touch with our pension scheme team to find out more about how they can help you.

  • How can I make sure my charity accounts for Gift Aid properly?

    Claiming the right amount of relief under Gift Aid and the Gift Aid Small Donations Scheme (GADS) depends on a clear policy and good record keeping. Make sure that you:

    • Keep gift aid declarations for 6 years after the most recent donation on which you claimed gift aid.
    • Keep an audit trail to link each gift aid claim to a specific individual donor and their gift aid declaration.
    • Keep a record of which donations you are claiming for under GADS and those you are claiming for under Gift Aid to avoid making duplicate claims. Having a clear policy on what you will claim for under each scheme will help you to manage this.
    • Check your GADS claim is the lower of:
      • £8,000; or
      • 10 times the amount of donations on which Gift Aid has been claimed

    Errors on Gift Aid claims will be extrapolated by HMRC and used to calculate any repayment due to them. This calculation may be applied to up to 6 years of claims, so getting it wrong could be costly. Ask your accountant to check your Gift Aid process is robust.

    Do you still have questions? Get in touch with our charities team to find out more about how they can help you.

  • Does my charity require and audit or independent examination?

    To decide if your charity needs some form of external scrutiny, you will need to refer to:

    • Statutory framework and audit thresholds for charities
    • The charity’s governing document

    You must follow whichever of these sources of guidance stipulates the highest standard of scrutiny.

    Statutory framework

    Charities with a gross income of £1m or less can decide to have an independent examination instead of an audit as long as:

    • their gross assets do not exceed £3.26 million and
    • their gross income does not exceed £250,000.

    Charities with gross income of £25,000 or less are not generally required to have any form of external scrutiny.

    The governing document

    Trustees will need to interpret the precise wording of the charities governing document to clarify what sort of external scrutiny is required. The Charity Commission recommends that trustees keep a record of how they interpret the charity’s governing document, and, if in doubt, consult the Commission for advice.

    Your charity’s governing document may stipulate who should carry out the review. This is a minimum requirement that the trustees have to meet, and it could mean that your charity has to have a more stringent review that it is obliged to have under the statutory guidance.

    Do you still have questions? Get in touch with our charities team to find out more about how they can help you.

  • When is capital gains tax due on the sale of my home?

    Capital gains tax is normally not payable on gains you make on your only or main home, because these qualify for private residence relief (PRR). If you use more than one home, you can nominate which will be tax-free. It doesn’t have to be the one where you live most of the time.

    When you sell your main home, all or part of any gain will usually be taxable if:

    • You develop your home – for example by converting part into flats
    • You sell part of your garden and your total plot is over half a hectare (1.2 acres)
    • You use part of your home exclusively for business
    • You let all or part of your home for all or part of the time you have owned it
    • You live away (though gains relating to some absences are tax-free, including absences in the last 18 months that you lived there)
    • You bought or improved the home wholly or partly for the purpose of making a profit.

    Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • How can I check my residence status?

    Your residence status depends partly on the number of days you spend in the UK during the tax year and partly on certain other factors.

    A Statutory Residence Test (SRT) must be applied to each tax year from 6 April 2013 onwards. If you were visiting or living in the UK before 5 April 2013, you will need to consider two sets of rules when you check your residency status.

    To add to the complications, your residence position in one tax year can affect the conditions that apply to your residency in a future year. If you want to retain non-residency status – and the tax benefits that go with it – seek advice from a suitably experienced tax professional.

    Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • As tax becomes digital, will I still need to do an annual tax return?

    The government’s ‘Making tax digital’ strategy is being rolled out gradually between 2016 and 2020. The self-employed as well as unincorporated businesses and landlords with a turnover/income above the VAT threshold are the first to be affected.

    Under the new regime, affected taxpayers must provide income information to HMRC each quarter. HMRC will only accept the information in a digital format so, if you are affected, you will need to use a software package to maintain your records throughout the year.

    If you fall within this group of taxpayers, you will start submitting quarterly updates to HMRC in the second half of 2018 (based on current government guidelines). Get ready for digital reporting by finding the right software now, so you are familiar with recording the right information and have made any necessary tax planning adjustments before quarterly reporting starts. We can advise you on what you will need to record and help you choose the right sort of software for your needs.

    Each year, you will be required to submit an end of year activity report within nine months of the end of your accounting period. This is a final opportunity for you and your tax adviser to make adjustments to your income statement. In this respect, it is similar to an annual tax return as it will finalise your tax position for the year.

    Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • What does your tax return service include?

    A tax return is more than a simple compliance tax. If it’s done well, a tax return is also a milestone in your annual tax planning and an opportunity to save money.

    Before you become a personal tax return client, we’ll discuss your needs with you so that we understand how we can best help you. We will then be able to give you a bespoke proposal and an accurate fee estimate.

    We’ll provide you with a checklist of the documents and information that we need to prepare your tax return and remind you when we need it. Different sorts of tax payers need to provide different types of information. For example, if you are landlord, the information you provide will be different from a business owner or an employee.

    Once we have your information, we will review your overall tax position before discussing any available allowances and reliefs with you, as well as any longer-term tax planning ideas.

    You’ll receive your completed tax return for review, along with supporting information that shows how we have arrived at the final figures. If you have any queries on your tax return, we’ll be on hand to answer them.

    When you’ve signed your tax return and sent it back to us, we will:

    • Submit your tax return to HMRC and provide you with a copy
    • Notify you of the amount of tax you need to pay and when you need to pay it.
    • Remind you when your tax payments are due and provide a ‘how to pay your tax online’ guide which will help you to make payments quickly and easily.

    Throughout the year, we’ll let you know of any changes to tax law that may affect you. We will also be on hand answer your queries on HMRC correspondence such as their tax calculations, statements or PAYE coding.

    Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • What has happened to wear and tear and renewals allowances?

    The 10% per annum wear and tear relief available to those letting furnished residential property, was abolished in April 2016, along with the renewals allowance. They were replaced with a new relief which allows a deduction based on the ‘actual costs of replacing furnishings’ on a like for like basis, less any proceeds from selling the items you have replaced.

    The not-so-snappily named new Tax Relief for Replacing Furnishings in Let Residential Dwelling-Houses affects expenditure incurred on or after 6 April 2016 for income tax and 1 April 2016 for corporation tax. It applies to items for domestic use including furniture, furnishings, household appliances and kitchenware, but excluding fixtures. It is not applicable to dwellings that you rent out (in whole or in parts) as holiday lets or that generate income under the rent a room scheme.

    The legislation to enact this change is expected in the Finance Act 2016. WMT can advise you on how to transition between the old regime and the new so you can make the most of this relief.

    Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

  • What is the ‘restriction of interest relief’?

    If you are a residential property lettings landlord, the amount of interest relief you can claim on financial costs will gradually reduce between 6 April 2017 and 5 April 2020.

    You will be affected by this change unless you are:

    • letting a residential property that meets all the criteria for a furnished holiday let; or
    • are running a property business through a company, including a non-resident company subject to income tax.

    Your finance costs include mortgage interest, interest on loans to buy furnishings, and fees incurred when you take out or repay mortgages or loans. No relief is available for capital repayments of a mortgage or loan.

    If affected, the proportion of finance costs you can offset against rental income from your residential buy to let properties will gradually reduce from April 2017. By tax year 2020/21, you will only be able to claim a tax deduction for these costs at the basic rate of income tax in your annual tax computation.

    From 6 April 2017 to 5 April 2020, a restriction will apply as follows:

    • 2017/18 – 75% interest full deduction: 25% interest relieved at basic rate of income tax;
    • 2018/19 – 50% interest full deduction: 50% interest relieved at basic rate of income tax;
    • 2019/20 – 25% interest full deduction: 75% interest relieved at basic rate of income tax;
    • 2020/21 – 100% interest relieved at basic rate of income tax.

    These rules apply to ‘costs’ of a dwelling-related loan, so they extend to other deductions including the incidental costs of obtaining loan finance.  A loan taken out to acquire a motor vehicle used in the management of a property business will also have a restriction on the allowable interest.

    Tax planning advice from WMT’s specialists can help reduce the impact of the loss of relief and protect your cashflow.

    Do you still have questions? Get in touch with our private client tax team to find out more about how they can help you.

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