Christmas is around the corner and the SelfAssessment deadline is fast approaching. Make sure you avoid penalties, get in touch for advice.

Phishing tax refund email targets university students

HMRC has warned that university students are being bombarded with fake tax refund emails. The scammers have targeted university students in an attempt to steal their banking and personal details using.ac.uk email addresses that look genuine, in order to avoid detection.

Mel Stride, Financial Secretary to the Treasury said:

‘Although HMRC is cracking down hard on internet scams, criminals will stop at nothing to steal personal information.

‘I'd encourage all students to become phishing-aware - it could save you a lot of money.’

In common with other tax scams, fraudsters send a message, including HMRC, GOV.UK or credit card branding, supposedly advising the recipient about a tax refund. Those taken in by the fake email are asked to click on a link and enter their banking and personal details. Fraudsters can use this information to steal money from bank accounts or to sell on to other criminals.

Inheritance Tax Review by Office of Tax Simplification

The Office of Tax Simplification (OTS) has published the first of two reports on inheritance tax.

The first report sets out an explanation of the issues and complexities of IHT, gives an overview of concerns raised by the public and professional advisors during the review and then makes recommendations. This first report examines the administrative issues that people complain about and which were raised in the responses. The second report covering other wider areas of concern to people will follow in Spring 2019.

The first report highlights the benefits of:

reducing or removing the requirement to submit forms for smaller or simpler estates, especially where there is no tax to pay

simplifying the administration and guidance

the advantages of banks and other financial institutions having standardised requirements
automating the whole system by bringing it online

Angela Knight CBE, OTS Chairman, said:

‘Inheritance tax is both unpopular and complicated. The basic design of the tax itself is for government, but at the OTS we can address that most frequent of all comments “at least make it easier for the families to fill in the forms”. The OTS has worked on ways to address these practical complexities, which have come through loud and clear.’

‘The recommendations in this report will make it easier for the majority, and would mean that in future, many may not have to do the forms at all. Improving the administration of this tax in these ways is important as having to deal with the current process can seem overwhelming to people at a time when they are both preoccupied and distressed.’

Tax Free Christmas Party

Whether you are a one-person limited company or employ hundreds of staff, you are entitled to provide an annual event for yourself and any staff you employ, and reclaim the costs against the company, saving corporation tax.

Your company may also be able to claim the input tax if it is VAT registered and use the standard rate VAT scheme (apportionment applies where non-staff are invited, such as spouses).

The cost per head can include accommodation, transport, food and drink – but must not exceed the £150 threshold per head, not even by a penny. So, if the cost per head works out at £151, then £151 is taxable as a benefit-in-kind and has to be declared on P11d. Cost per head is worked out by dividing the total cost of the party by the number of attendees, including non-staff. Therefore, if you are a one-person company and invite your partner, you can spend £300 tax-free.

The party must also be open to all company employees to attend. Not all employees have to attend, but they must be entitled to attend.

Another point to consider is that you do have to hold an event in order to reclaim the costs against your company. You can’t simply make a cash claim for £150.

This exemption does not apply to sole traders, clients, suppliers, subcontractors, partners of a partnership. The exemption is only available for limited companies.

Contact us if you have any questions.

Sheena FCCA

Seasonal gifts to employees - make sure they are tax free

Christmas is approaching fast, during this festive season, some employers may wish to make small gifts to their employees.

In order for the benefit to be exempt it must satisfy the following conditions:

• the cost of providing the benefit does not exceed £50

• the benefit is not cash or a cash voucher

• the employee is not entitled to the voucher as part of a contractual arrangement (including salary sacrifice)

• the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties

• where the employer is a 'close' company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50.The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. Some HMRC examples consider gifts of turkeys, a bottle of wine or alternative gift voucher.

Further details on how the exemption will work, including family member situations, are contained in HMRC manual.

However if you are unsure please do get in touch before assuming the trivial benefit you are about to provide is covered by the exemption.

Best wishes

Sheena FCCA