The adjusted net income threshold at which child benefit will begin to be withdrawn has been increased from £50,000 to £60,000.

The new threshold will come into effect from 6 April this year.

But how will this impact you?

Understand the ins and outs of the new threshold to ensure you remain compliant and receive the benefits you are entitled to.

The changes

The threshold has risen for the first time since 2013, meaning half a million families will receive more child benefit than they do now.

Child benefit is currently paid at £24 per week for one child but this will rise to £25.60 in April.

For each additional child, child benefit is paid at £15.90 per week however this will also rise to £16.95 from next month.

The rate of taper has also been halved in comparison with where it is now.

A benefit has previously been withdrawn on a tapered basis where an income band is between £50,000 and £60,000.

Under the new measure from Jeremy Hunt, this action will now only occur between £60,000 and £80,000.

If you are an individual with an income over £80,000, the tax charge will equal the amount of your child benefit payment.

For example, if you have an income between £60,000 and £80,000, then the rate at which HIBC is charged will be halved and will equal one per cent for every £200 of income that is more than £60,000.

What will this mean for you in the long-term?

Under the new rules, child benefit is withdrawn when one parent has an adjusted net income of £60,000 or more a year.

Adjusted net income relates to an individual’s total taxable income before any personal allowances and less certain tax reliefs.

These include pension contributions or trading losses (if you are self-employed).

For example, if you and your significant other earn £59,000 a year then you will receive the benefit in full despite earning a joint £108,000 – child benefit, however, is withdrawn when one parent earns over £60,000 even if the overall household earn is less.

It has been referred to as a ‘tax on children’ and previously resulted in many parents repaying some or all of the benefit.

But, under the new measure, 170,000 families will now avoid paying back any benefit in the 2024-25 year.

The Government estimates 485,000 families will gain an average of £1,260 in child benefit – and you could be one of them.

If you have two children, you might gain up to £2,212 a year so it is important you understand how the changes affect you and what you need to do to receive the new financial benefits.

Is there anything you need to do?

Overall, you need to be aware of and understand how to use HICBC as this is a policy that still impacts your tax if not correctly followed.

Complexities might still arise if your adjustable next income fluctuates or if your family circumstances change.

The changes that take place from 6 April should not affect how individuals who receive child benefit payments engage with HMRC.

If you have an income higher than the new HICBC threshold when it comes into effect, then you will continue to be required to complete a Self-Assessment tax return to pay HICBC.

You should know that new claims to child benefit will automatically be backdated by three months, or to your child’s date of birth (whichever is later).

For any claims made after 6 April this year, backdated payments will be treated for HICBC purposes as if the entitlement fell in the 2024-25 tax year.

This happens if the backdating would otherwise create a HICBC liability in the 2023-24 tax year.

The changes to HICBC can be tricky to navigate so you need to know the ins and outs of the new changes as well as seeking the advice of our expert accountants to ensure you remain compliant with your tax obligations and know how you might be affected.

If you would like to know how the new High Income Child Benefit Charge might impact you, please contact us today.

The post How will the new High Income Child Benefit Charge affect you? appeared first on Grunberg & Co.

Under the new regulations, digital platforms like eBay, Vinted, and Airbnb are now required to collect and report the earnings of their UK-based users to HM Revenue & Customs (HMRC) from the start of this month.  

This move is part of a broader effort to bring transparency to the burgeoning online marketplace and ensure compliance with tax obligations, but it could mean that you are liable for increased taxation or that you have been moved into a higher band of tax. 

For small business owners, the heightened scrutiny from HMRC should highlight the importance of proper financial reporting.  

While it has always been essential to file accurate tax returns, the automatic sharing of data between online platforms and HMRC adds a new layer of urgency.  

If your reported income does not align with the information that platforms will now be providing to tax authorities, you could be at serious risk of penalties and fines.  

Discrepancies, intentional or otherwise, could mean the end of your business or at least significant financial repercussions.  

Income Tax bands and higher tax brackets 

One of the most pressing concerns for small business owners in light of this legislation is the potential shift into higher Income Tax bands.  

As online sales and earnings become more transparent, businesses that were previously underreporting income might find themselves in higher tax brackets because their finances have become more transparent.  

If you think that your overall tax liability has been affected by the changes it might be time for a re-evaluation of your current financial strategies. 

Allowances and exemptions 

It is crucial for small business owners to be aware of the allowances that could influence their tax calculations.  

The trading allowance permits individuals to earn up to £1,000 annually without incurring tax.  

Additionally, the rent-a-room scheme allows up to £7,500 per year tax-free for those renting out a room in their own home through platforms like Airbnb.  

Understanding and utilising these allowances can be a strategic way for you to manage your tax liabilities effectively. 

An experienced accountant can help you navigate tax exemptions and determine which allowances you are entitled to.  

When to seek guidance on navigating these changes 

The complexities and implications of this recent legislation change should highlight the necessity for professional guidance for most businesses.  

For small business owners and online traders, an accountant can help you stay compliant and enhance your business’s financial health overall.  

A tax expert can provide valuable insights into managing your tax liabilities, utilising allowances effectively, and avoiding potential pitfalls as a result of the new regulations. 

So, rather than trying to muddle through the new regulations alone, speak to one of our team.  

The post Recent changes to e-commerce taxation could put your finances at risk appeared first on Grunberg & Co.

But you need to be aware that the grants are classed as taxable income, so they must be declared on your Self-Assessment tax return for 2021/22.

With over 2.9 million people claiming at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2022, this will impact a lot of people.

If you didn’t already know, the deadline to submit your tax return is 31 January 2023, and the sooner you get ready, the better.

What needs to be declared?

As this is not a usual payment that you receive, it is easy to miss these payments when completing your tax return.

The Self-Employment Income Support Scheme (SEISS) application and payment windows during the 2021/22 tax year were:

• SEISS 4: 22 April 2021 to 1 June 2021
• SEISS 5: 29 July 2021 to 30 September 2021

Other support schemes were in operation during the pandemic and may also need to be declared on your tax return.

If you also received other taxable support payments during the 2021/22 tax year, you may also need to report this on your Self-Assessment tax return if you are:

• Self-employed
• In a partnership
• Required to otherwise complete a tax return

Further information on which COVID-19 grants you need to declare can be found here.

To make sure you are filling in your tax return correctly, it is best to seek advice from an expert.

Need support with your tax return? Contact our team today.

The post Have you declared your COVID-19 payments? appeared first on Grunberg & Co.

There are plenty of agencies that claim to make your life easier by reclaiming tax refunds on your behalf but, in some cases, they could be holding your money for longer than necessary or even making claims without your knowledge!

There has been a rise in complaints to HM Revenue & Customs (HMRC) about companies claiming tax repayments on individuals’ behalf.

The latest research from Money Box revealed that there were 1,808 cases between January 2022 and 16 August 2022, compared with 749 cases in 2021.

How does this happen?

Companies can claim your tax repayments if you have signed a “deed of assignment”, which permits them to contact HMRC on your behalf.

However, due to the market being unregulated, some companies take advantage by making the terms of the agreement unclear.

If this is the case, you may have unknowingly granted permission for the company to hold your money or take a larger fee than you expected.

What can you do to prevent this?

Currently, HMRC is looking into the use of repayment agents but no action has been taken so far.

To protect yourself from agreeing to unreasonable terms, it is best to seek advice from your accountant on which repayments you are entitled to and how to claim these.

Your accountant will have a clear idea of the taxes you must pay, as well as being able to recognise any opportunities to reclaim overpaid taxes that you may miss, and when you can reclaim them.

Think you might be due a tax refund? Contact us.

The post Are you using a repayment agent to reclaim your taxes? appeared first on Grunberg & Co.

Workers have also been hit by a National Insurance rise in April. However, this has been mitigated as the threshold for when you start paying National Insurance has moved into line with your personal tax allowance. The threshold for paying the NI has risen from £9,880 to £12,570, saving taxpayers an average of £330 a year.

Everyone has a personal allowance which is tax free and above that, depending on your tax rate, you will pay either 20, 40 or 45 per cent income tax.

The basic tax rate of 20 per cent starts at £12,750, rising to £50,270 when the 40 per cent rate kicks in. The 45 per cent rate starts at £150,000.

What is my tax-free Personal Allowance?

The standard Personal Allowance is £12,570 but may be bigger if you claim Marriage Allowance or Blind Person’s Allowance, (an extra 2,600). It’s smaller if your income is over £100,000 and reduces by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above.

The marriage allowance let one partner transfer £1,260 to the other partner, thereby reducing their tax by up to £252 (1,260×20%) in the tax year to 5 April the next year.

The one partner’s Personal Allowance becomes £11,310 while the other can earn an extra £1,260 tax free.

Income tax bands are different if you live in Scotland.

You have tax-free allowances on:

• Interest on savings
• Dividends, if you own shares in a company

You do, however, pay tax on any interest, dividends or income over your allowances.

Tax free allowances include:

• Trading allowance, which is your first £1,000 of income from.
• You can also save £1,000 of income from property you rent.

For help and advice on any personal tax matters, please contact our expert team.

The post Make sure you claim any tax allowances you are eligible for appeared first on Grunberg & Co.

Taking the time to arrange your affairs in advance of your passing not only makes sure wealth is passed to the right beneficiaries but often also ensures it isn’t heavily taxed.

Managing an estate after your death requires your family or an appointed professional to conduct a process known as probate.

What is probate?

Probate is a legal process that is sometimes required to validate a deceased person’s will in order for their wishes to be carried out by an executor named in the will. The executor is the person responsible for administering the deceased person’s estate, ensuring debts are paid and remaining assets are distributed.

This grants the holder of the grant the power to administer an estate, to make sure all relevant taxes are collected, money owing to creditors is paid, debts owed to the deceased are collected and the remaining assets from the estate are distributed to the relevant beneficiaries.

As specialists in all aspects of taxation, accounts preparation and estate planning, Grunberg & Co. Probate Services are best placed to take care of your probate and estate administration work.

We are one of only a handful of accountancy firms in the UK granted a licence to manage this process.

If you are an existing client of our firm, we will already have an in-depth understanding of your personal and business finances, which means we already hold information that assists in completing the Inheritance Tax Return that is required for making a probate application.

What do I need to consider when creating a Will?

After every significant life event, we advise you to update your Will to avoid any issues with it later in life. This includes after moving house, having children, or entering new relationships. Even if you do not experience a major life event, it is worth reviewing your Will every couple of years to ensure it is up-to-date and reflects your current wishes.

In relation to this, it is also extremely important to create a new will after marriage. Once an individual gets married, their previous Will is then void.

In scenarios where an individual passes away without a Will in place, the laws of intestacy apply.

Therefore, wealth and assets will be distributed according to a rigid and commonly less tax-efficient formula, which could even see former spouses or estranged family members benefit from your estate against your wishes.

It is also important to consider what you leave and to whom. This is vital as it makes a significant difference to Inheritance Tax (IHT) bills – we advise that you always have IHT in mind when drafting a will.

How are IHT bills calculated?

An estate is liable to IHT where the following conditions are met:

• Its value exceeds the applicable nil rate band in the tax year in which the deceased died (that is, from 6 April in one calendar year to 5 April in the following calendar year); and
• The excess, or part of it, is not exempt from IHT. The exemption from IHT applies where the excess, or part of it, passes to:
• the spouse or civil partner of the deceased;
• a charity; or
• Another qualifying body recognised by HMRC as exempt from IHT.

IHT is charged at the following rates:

• Below the nil rate band allowance, the rate of tax is 0 per cent.
• On the balance, the rate of tax is:
• 20 per cent for chargeable lifetime gifts;
• 40 per cent on estates on death or 36 per cent where 10 per cent or more of the net estate is given to charity.

An estate or that part of it that is within the nil rate band (currently £325,000 per person) is not charged IHT. However, the nil rate band or part of it may be not available to the estate if the deceased used it up during their lifetime, for example by making:

• Gifts or transfers of value to trusts and companies which are chargeable to IHT.
• Potentially exempt transfer (PET) which have not become exempt transfers because the deceased has not survived seven years after making the transfers.

Any part of an estate that passes to a spouse or civil partner is exempt from IHT provided that both parties were domiciled or deemed domiciled in the UK or neither were domiciled nor deemed domiciled in the UK.

In addition to a deceased’s own nil rate band, where the deceased died on or after 9 October 2007, having survived their spouse or civil partner, the estate may take advantage of the unused percentage of the previously deceased spouse’s or civil partner’s nil rate band. This combined allowance will total £650,000 across both estates.

Individuals who die on or after 6 April 2017 can also benefit from an additional main residence nil rate band (residence nil rate band (RNRB)) if they leave their main residence to their direct descendants. The current RNRB is £175,000 and can be transferred to a surviving spouse or civil partner, meaning that a couple can pass on up to £1 million tax-free.

The RNRB also applies to estates where the deceased downsized by moving to less valuable property or ceased to own property altogether, and where their direct descendants inherit other assets equivalent to the value of the residence at the date of sale.

In some cases, if IHT is payable on the estate, or it is just below the IHT threshold, it is advisable to use a chartered surveyor to value land and buildings and a suitably qualified valuation professional to value unquoted shares.

We also highly recommend using a professional accountant for all your probate matters as they understand complex financial tax matters like these.

How can we help you?

• Estate administration – Assisting the executors or administrators to obtain the “grant” to deal with the deceased’s estate.
• Identifying the assets and liabilities of the Estate – Including bank accounts, pensions, properties, shareholdings, taxes, credit cards, insurance, utilities, etc.
• Valuing the assets of the Estate – Valuing assets in accordance with the Inheritance Tax (IHT) Act 1984, and claiming all reliefs (spouse exemption, charitable gifts, etc.) and transferable nil rate band if applicable.
• Completing the Statement of Truth and IHT forms – This will include either IHT400 or IHT205 depending upon whether the estate is excepted.
• Obtaining a grant of probate – Correspondence with HM Revenue & Customs (HMRC) and Probate Office.
• Estate accounts preparation – Drawing up financial statements showing incoming and outgoing of the Estate and ensuring that assets are distributed in accordance with the Will (or as deemed by law where there isn’t a Will).
• Income tax returns – A Self-Assessment tax return may be required if the deceased had income from sources such as self-employment, interest, rental, overseas income or had capital gains or higher rate tax liability.
• Administration period returns– During the administration period, if income and capital gains arise, these have to be reported to HMRC and tax paid. The exception is if the assets are assigned to the beneficiaries then they will have to report the income and capital gains on their tax returns.

At Grunberg & Co. we can help you put plans in place to minimise IHT including a full Will review, advice on setting up a trust, identifying assets that qualify for business or agricultural property relief and much more.

For help or advice on related matters, please contact us today.

The post A guide to Probate, Wills, and Inheritance Tax appeared first on Grunberg & Co.

The post Make sure to make full use of the pension allowance this tax year appeared first on Grunberg & Co.

The post Year-End Tax Planning – Are you prepared for the tax year-end? appeared first on Grunberg & Co.

The post 1.8 million yet to submit tax return, HMRC reveals appeared first on Grunberg & Co.

• Being prevented from selling the property owing to Government guidance during the COVID-19 pandemic; or
• Other action taken by a public authority preventing the sale of the property

It has also been confirmed that sellers must complete the sale of their main residence as soon as they ‘reasonably could’ after the lockdown to claim the SDLT surcharge refund, but it has not been confirmed how lenient HMRC will be on this timeframe.
The change is set to be introduced in the Finance Bill 2020, and according to industry experts, will be a permanent change.
For help and advice, contact our expert team today.

The post Stamp duty: Government relaxing three-year rule for reclaiming surcharge for exceptional circumstances in relation to COVID-19 appeared first on Grunberg & Co.