Ban on Heterosexual Civil Partnerships Ruled as Discriminatory
Supreme Court rules that the UK is discriminating against heterosexual couples who seek to formalise their relationships as civil partnerships instead of a marriage. Five justices agreed that current legislation allowing only same-sex couples to enter civil partnerships as a legal union is unfair.
Civil partnerships are given the same legal rights as married couples, such as tax allowances and the right to share assets when the union is dissolved.
Training for Self-Employed to be tax deductible?
A government proposal to make training for new skills for the self-employed tax deductible is being welcomed by the Association of Independent Professionals and the Self-Employed (IPSE).
IPSE have said that the tax relief should not be limited to formal qualifications, but also include the training many sole traders need which are specific to their individual trade such as general training on how to run a business – such as marketing or accounting.
IPSE does however, question the necessity of an annual cap on tax relief spending on the self-employed, an issue which has been raised in the consultation papers. Imogen Farhan, IPSE Policy and External Affairs Officer, commented:
“We would also recommend the government follow the lead of many OECD nations by not imposing an annual cap. It is difficult to imagine a cap that would be suitable for all sectors and earning levels. Instead, the government could minimise the risk of misuse by introducing clear rules on the types of training people can undertake.”
Marriage Tax Allowance – What is it?
The marriage tax allowance is a tax break designed to allow you or your partner to transfer one another part of your personal allowance.
Your personal allowance is the amount you can earn tax free every year. For 2018/19 this amount is £11,850.
Being able to transfer over your personal allowance means that you or your partner could save up to £238 in tax this year.
Once you have signed up for marriage tax allowance, as long you continue to meet the following criteria, you will get the tax break every year:
You are married or in a civil partnership.
Either yourself or your partner are a non-taxpayer (earn less than this tax years personal allowance of £11,850).
The other person in the relationship must earn less than £46,350, which is the upper limit of the basic tax rate of 20 per cent.
You both have to be born on or after April 6 1935.
You can still claim the allowance if your partner died after April 2015.
The partner who doesn't pay tax can transfer up to a limit of £1,190 of their unused personal allowance to the other person in the relationship, saving the tax paying partner up to £238 in tax.
HAPPY NEW TAX YEAR!
The 2018/19 tax year begins today bringing with it a number of changes to income taxes and personal allowances. Here’s a brief summary of what to expect…
The standard personal allowance will rise from £11,500 to £11.850. This is the amount you can earn without paying income tax and works out as a tax cut of £70 for most people.
The starting point for paying 20% basic rate tax will be £11,850, while 40% tax will start on earnings above £46,350. This is up from £45,000 the previous tax year.
The level at which National Insurance will be charged at 12% of income on earnings rises from £8,164 to £8,424. On earnings above £46,350 the rate drops to 2%.
From today workers must make pension contributions of a minimum of 3% of salary (up from 1%). Employer contributions rise from 1% to 2%.
Buy-to-let landlords will only be able to offset 50% of their mortgage interest when calculating their tax bill. This compares to 75% previously.
The amount of tax-free dividends you can earn drops from £5,000 to £2,000.
Childcare voucher scheme extended by six months
Following a commons debate, the government has announced that employers will be able to offer childcare vouchers to employees until October 2018. The scheme had been due to close to new entrants on April 5. No exact date in October has been given.
Employees who join the childcare voucher scheme can sacrifice up to £55 per week from their pre-tax salary to cover the costs of childcare, free of tax and national insurance.
The childcare voucher scheme is set to be replaced by a new system of tax-free childcare. The new system will provide working parents with financial support of up to £2,000 a year per child. Both parents must earn more than £120 a week to qualify.
Welsh land taxes
If you are about to buy a property in Wales, you need to consider the new land transaction tax (LTT) that comes into effect for all property deals which complete on or after 1 April 2018. The LTT replaces stamp duty land tax (SDLT) and in general its rates are lower (see table).
If you are purchasing a residential property for more than £400,000 or commercial property costing more than £1.1 million, you may save some tax if you complete before 1 April. There is no special exemption for first-time buyers, as the average amount paid for a first home in Wales is around £160,000 which falls within the zero-rate band.
Rent a room relief
The rent a room scheme is designed to encourage people to let out a spare room to a lodger and hence increase the availability of low cost accommodation. The relief can also cover short-term lets. If you let rooms in your own home by the night through sites such as Airbnb, the scheme can apply, even if the letting amounts to a bed and breakfast business.
The relief covers gross rental income of up to £7,500 per year from letting furnished residential accommodation in your own home. You must live in the same property as the let rooms, though the relief can apply to rent received when you let the whole house for short periods, perhaps while you are away on holiday.
National Minimum Wage and directors
The national minimum wage (NMW) rates rise on 1 April 2018. Most directors of their own companies do not have to pay themselves the national minimum wage. This is the case where the director does not have a contract of employment with the company and is effectively paid only for their role as an office holder.
Where the director does have an employment contract with the company, they will be treated as an employee for NMW purposes and the NMW should be paid for all the hours they work.
Paying your children from the business
You can pay your children out of your business, but they must do some real work for that money, work which is worth what you pay them. You can't pay over the odds for an office assistant just because the worker is your relative.
The work needs to be performed at your business premises. Skills which could be used to promote your business online or to design marketing materials could be applied remotely, perhaps while they are away at university. However, you need to be able to prove that adequate work was performed for the rewards.