Q: My wife and I have some properties in joint names but I stumped-up most of the cash for the purchase of the properties so it seems only fair that I get the lion’s share of the income from them too. But I have been told the income HAS to be split 50:50- is this correct?
A: I’m afraid to say it is the position by default. If you live with your spouse or civil partner, the income from property held in joint names will be split in equal shares; regardless of any other circumstances.
However, clearly this puts married couples at a disadvantage to unmarried couples and therefore, there is now a way that married couples can apply to have the income allocated in an unequal way.
It does involve an application process though and you’re unlikely to be successful if for instance, your motives are only to shift more income to an individual paying tax at a lower rate.
Category: Income Tax
P11Ds not due anymore
Q: I had originally advised HMRC that P11Ds would be due for my employees, but I made a mistake and actually there are no expenses payments or benefits to return. Can I just ignore the P11D(b) I have been sent to complete?
A: Absolutely not! HMRC will be expect P11Ds and a P11D(b) from you and therefore, if the P11D(b) does not arrive, you will automatically receive a late filing penalty.
You should complete the P11D(b) accordingly- with nil entries and ticking the appropriate box stating ‘No expenses payments or benefits of the type to be returned on forms P11D have been or will be provide’ etc. Then sign and date it and send it to HMRC as you would normally.
Alternatively, you may inform HMRC online that no P11Ds are due- which might be preferable given the proximity of the deadline.
Category: PAYE, NIC & Benefits In Kind
July tax bill
Q: I have just received my income tax bill for my payment due by the end of July. It seems really high- is there anything I can do to reduce it?
A: The payment due in July is like an “instalment” for next year’s tax. HMRC will use your circumstances last year as a basis for setting these.
However, if you have good reason to believe that this year’s income will be lower than last year’s, you may apply to reduce your July payment. This must be done by 31st January.
Be aware that if you reduce your payments too low, HMRC will levy interest- but you can amend your application if you discover this in time.
Alternatively, you could just prepare and submit your tax return. This will then trigger the comparison of these estimated payments (called Payments on Account), with your actual tax liability. So any over or underpayment will be calculated.
Category: Income Tax
To furnish or not to furnish?
Q: I have just purchased a couple of properties that I intend to let out. Can you tell me whether I am better to furnish them or not?
A: Furnishing has always been an important distinction, as only furnished lettings entitle you to the valuable Wear and Tear Allowance of 10% of the rents.
Now it is definitely worth reviewing whether you could show the property is furnished given that the renewals basis for replacing items in commercial or residential properties let unfurnished ceased from 6th April 2013.
Loosely-speaking, HMRC guidance is that a property is furnished if it includes some (but not necessarily all) items that a tenant or owner-occupier would normally provide in unfurnished accommodation.
Category: Income Tax
Tax Credits renewal
Q: I have just received my first tax credit renewal pack since becoming self-employed. Do I need to complete my tax return before I fill in the renewal form?
A: Ideally, you should complete your renewal form with the figures entered from your tax return for the last tax year, i.e. year ended 5th April 2013. This will ensure your tax credits award is as accurate as possible.
However, if you have not yet completed your accounts and tax return for the most recent tax year, you may submit estimated figures to the Tax Credit Office. This must still be done on the renewal forms and by 31st July 2013 as normal.
You must supply the Tax Credit Office with the actual figures as soon as possible though- and no later than the 31st January 2014.
Category: Tax credits
Bookkeeping software
Q: I am just starting out and I’m looking to buy some bookkeeping software. Can you list some of the keys differences between desktop software or subscribing to some online software?
A: Desktop bookkeeping software
- Speed- Can be quicker as you’re not working online and therefore reliant on internet speed
- Price- Can be cheaper as may only be a one-off payment; unlike Cloud-based software which may be infinite, monthly subscription payments
- Mobility- you can work anywhere; anytime provided you have an internet connection
- Communication- you may be able to email your customers through the software; therefore allowing you to attach documents to the emails such as outstanding invoices. Some may even facilitate you takings payments from your customers and others have Apps to download to your smart phone for use when you’re out-and-about
- Integration- Due to the evolutionary nature of Cloud-based software, it tends to be compatible with more software than traditional desktop products
- Security- Check with your supplier, but generally, the data in Cloud-based software is much more secure than in desktop software- which could disappear during a thunder storm!
Category: General Business
