Exchequer Weblog

The summer is here and the exams are over, so many young people will be leaving school or college this month to take their chances in the jobs market. It is a daunting prospect; trying to cope with the tax and benefits systems for the first time.

If your child is in this position you could point them towards the HMRC web site designed for 16 to 19 year olds:
http://www.taxmatters.hmrc.gov.uk; it covers topics such as NI and how the NI number is important, what is PAYE and self-assessment. There are also quizzes and a teacher’s area including materials teachers can use to explain tax to different age groups of students.
Also, as a parent, you may need to tell HMRC that your child is no longer in full-time education.

Compulsory online filing for VAT returns is here. The first period for which an established business with a turnover of £100,000 or more is required to submit their VAT return online is the quarter ending 30 June 2010. That VAT return is due in by midnight on 31 July 2010. In fact as the VAT return is submitted online the submission date is stretched to 7 August 2010, although a VAT repayment claim must still be received by 31 July.

Businesses who always receive VAT repayments can ask to complete monthly VAT returns, in which case the first period for which they must submit their VAT return online was 30 April 2010.

Once you start to submit your VAT returns online you will no longer receive a paper form from the VAT office, or any type of paper reminder so the onus is on you to file within the required dates.

There are a number of approved share schemes that a company can use to provide its employees with shares in the company they work for, or options to buy those shares at a favourable price. The scheme designed for small companies to use is the Enterprise Management Investment scheme (EMI).

If the company chooses not to use one of the approved share or share option schemes and issues shares or options to its employees, there can be some very serious tax consequences, such as:

• The employee is taxed on the value of the shares he receives as if that value was part of his salary.
• The company must pay the employer’s class 1 NICs on the value of the shares issued.

The June Budget introduced some complex changes to capital gains tax (CGT) that apply from 23 June 2010. For disposals made on or after that date there are now three alternative tax rates for individuals.

Taxable income and gains after deduction of allowances up to £37,400 are taxed at 18%. Those over the £37,400 limit are taxed at 28% and gains subject to entrepreneur’s relief are taxed at 10%.

The old CGT rate of 18% applies to all capital gains made by individuals and trustees from 6 April 2008 to 22 June 2010 inclusive, irrespective of the amount of the gain or the person’s level of income. Trustees pay CGT at 28% on all gains made on or after 23 June 2010 irrespective of the level of income of the trust.