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If you have received a lump sum payment from your pension fund you may have had excess tax deducted from it. This happens, for example, because the pension provider tends to use an emergency PAYE code for the first payment you take from your fund.

If you have had tax incorrectly deducted from a lump sum payment, you will get it back from HMRC if the pension scheme doesn’t refund it. However, there are several different claim forms, depending on the circumstances. We can help you with those forms.

If you do expect to take further pension payments in the same year, the tax repayment should be made when you receive the next pension instalment. However, for this to work, your PAYE code needs to be adjusted.

You can request a new tax code from HMRC through your online personal tax account. Alternatively, you can phone HMRC to ask for the code to be changed. We can do this on your behalf if you have authorised our firm to act for your personal tax affairs.

The Seed Enterprise Investment Scheme (SEIS) is specifically designed for young companies to raise relatively small amounts of start-up capital. The investors receive 50% income tax relief on the amount they subscribe for new shares, and those shares are exempt from capital gains tax (CGT) when they are sold after three years or more.

There is no minimum amount the company may raise, and no minimum each equity investor is required to commit, but there are maximum limits. The company is permitted to raise up to £150,000 over a three-year period, and the maximum SEIS investment per taxpayer is capped at £100,000 per tax year.

Companies which use SEIS tend to be risky ventures. Investors who subscribe for SEIS shares balance the chance that they will lose their money, with the possibility of making tax-free gains when the company is a success, and they can sell their shares at a large profit.

If you have made an SEIS investment, however small, you should claim the income tax relief due. Don’t miss out this step, as when you sell your shares you must show that you have claimed the income tax relief in order to benefit from the CGT exemption.

The tax avoidance rules known as IR35 have been in force since April 2000. They are designed to prevent employers and workers from reducing their tax and NIC bills by placing a company structure between the worker and the employer.

Unfortunately, it is difficult for HMRC to tell whether a small company has been inserted as an artificial step, or whether it is a genuine service business. If you operate through your own personal service company, you may need to prove to HMRC that your company is a genuine independent business and that you aren’t a disguised employee of your customer.

Here are some ways to show you are independent and that you are not caught by the IR35 rules:

• Work for several different customers, preferably concurrently, but certainly over a year
• Agree with your customer that you will provide a substitute if you can’t perform the contract personally
• Provide most or all of your own equipment
• Correct any faults in your work in your own time and at your own cost
• Work under your own direction as much as possible
• Don’t accept benefits which your customer normally provides to its employees
• Don’t attend social or training events hosted by your customer for its employees
• Don’t become part of the structure of your customer’s business
• Don’t become economically dependent on one customer

Do discuss your working arrangements with us if you are concerned that you could be caught by IR35.

The total amount of inheritance tax (IHT) paid to the UK Treasury increases by around 10% per year. This is largely due to rising residential property values and is frozen at £325,000 per person. IHT is payable at 40% above the nil band.

If you have children (step or adopted children count) some IHT may be saved by leaving an interest in your family home to one or more of your direct descendants. Such bequests allow the residential nil rate band (RNRB) to come into play, which is currently worth £125,000 per person, increasing to £175,000 from 6 April 2020.

The RNRB is added on to the normal nil band, to provide a total exemption of £500,000 per person (from 6 April 2020). This total exemption can be passed to the surviving spouse on death.

However, there are lots of conditions surrounding the RNRB. The interest in the property must pass to your direct descendant on death and not as a lifetime gift. If your total estate before exemptions and reliefs is worth over £2 million, the RNRB is tapered away by £1 for every £2 over that threshold. It therefore pays to plan to reduce the value of your estate down to £2 million, if that is possible.

Talk to us about planning to reduce the tax which will be payable on your death.

HMRC has long seen the construction industry as an area where tax avoidance is rife. The construction industry scheme (CIS) was imposed as a means to prevent labourers dodging tax on cash-in-hand payments.

The latest dodge concerns VAT charged by labour suppliers to their customers, who are normally larger builders. The customer pays the VAT on the supply of labour, and reclaims the VAT as input tax on its VAT return. However, the labour supplier never pays the VAT over to HMRC, and often disappears before the taxman can catch up with them.

To counter this VAT avoidance, HMRC will introduce a reverse charge for VAT on labour supplies, with effect from 1 October 2019. This change is a year away, but it will take time to adjust your systems to the new rules.

Under the reverse charge, the customer (the large building company) will account for the VAT on labour supplies to HMRC, rather than the labour supplier. So the building company pays the VAT to HMRC (output tax) and reclaims that same VAT as input tax. The labour supplier issues an invoice which indicates that the supplies it has made are subject to the reverse charge.

The types of businesses affected by this new reverse charge include those involved in all aspects of construction of buildings or structures, including decoration and cleaning during construction. It won’t cover the work of architects or surveyors. The reverse charge will apply up through the supply chain until the point where the customer is not making a supply of relevant services on to another business.

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Clarke Nicklin House, Brooks Drive, Cheadle Royal Business Park, Cheadle, Cheshire, SK8 3TD. Registered Number OC309225.
The firm is registered to carry on audit work in the UK & Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001178544. The professional rules applicable are the Audit Regulations and Guidance which can be found at www.icaew.com/regulations, and the International Standards on Auditing (UK and Ireland) which can be found at www.frc.org.uk/apb/publications/isa.cfm.