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Prior to April 2016, men born before 6 April 1951 and women born before 6 April 1953, qualified for a basic State Pension and an Additional State Pension.

If you were born after these dates you will qualify for the New State Pension and will no longer be eligible for the Additional State Pension (unless you inherit the Additional State Pension of your partner).

The remainder of this post set out details of the New State Pension (NSP). The basics:

• The earliest you can claim the NSP is when you reach the relevant State Pension Age.
• You will need to have paid at least 10 years National Insurance Contributions (NICs) to be eligible for any NSP payment.
• You will need 35 years of NICs to qualify for the full NSP.
• The NSP is currently £168.40 per week.

Check your pension record

You can apply online for a Pensions Statement that sets out the number of years contributions you have already made.

Claiming your pension

You have to claim your NSP, there is no automatic entitlement. You can claim online, by phone, by downloading a pension claim form or following a separate claims procedure if you live abroad.

Pension planning

Clearly, if a State Pension is your only income after you reach the State Retirement Age, this will be unlikely to cover the basics and you will need additional income or savings to make up the difference.

And the earlier you start this planning process, the more chance you have of achieving a reasonable income after retirement.

Action plan

We recommend that all readers consider the following action plan:

1. Apply for a State Pension Statement that clearly sets out the number of years NIC contributions you have made and those you still need to make to qualify for the NSP.
2. Organise a formal planning meeting with your pension’s advisor to ensure that you are keeping pace with your need to supplement the NSP with a private pension after retirement.

Time flies. Don’t leave this important aspect of your personal financial wellbeing until it is too late to create a reasonable pension fund, from State or private sources.

There are still a number of sales (disposals) that a UK taxpayer can make that will not incur a charge to the UK’s Capital Gains Tax. For most of us they are limited in extent, after all legislators have had plenty of time to close any favourable loop-holes.

For most of us, the major tax-free gain remains the sale of our home, but even this generous relief can be compromised. For example, readers who have let their home for a period should take professional advice to see if this will trigger a CGT liability when they sell.

Also, for the tax year 2019-20, individuals are entitled to make chargeable gains of up to £12,000 and pay no CGT.

If you jointly own a chargeable item, you would both be entitled to this £12,000 exemption and the £6,000 personal possession relief highlighted below.

Other tax-free gains include:

• personal possessions as long as the proceeds do not exceed £6,000
• your car, unless used in a business
• anything with a limited lifespan, unless used in your business
• ISA’s

Additionally, any gift to your spouse or civil partner, that would usually be subject to a CGT charge, is free of any CGT liability.

Even if none of the above exemptions apply in your circumstances there are a considerable number of additional reliefs you may be able to claim to reduce the impact of any CGT payable. If you are likely to be making disposals it is well worth the investment to see how you can quite legally reduce any impact of CGT.

A final note: take professional advice BEFORE you make the disposal. Seeking advice after disposal is rather like waiting for a bus after the last service has departed.

Readers are reminded that from 1 April 2019, the National Living Wage (NLW) and National Minimum Wage (NMW) hourly rates increased to:

• 25 and over – £8.21
• 21 to 24 – £7.70
• 18-20 – £6.15
• Under 18 £4.35
• Apprentices £3.90

Workers who are entitled to receive these rates as a minimum include:

• part-time
• casual labourers, for example someone hired for one day
• agency workers
• workers and homeworkers paid by the number of items they make
• apprentices
• trainees, workers on probation
• disabled workers
• agricultural workers
• foreign workers
• seafarers
• offshore workers

Workers who are not necessarily, entitled to the NLW ort NMW include:

• self-employed people running their own business
• company directors
• volunteers or voluntary workers
• workers on a government employment programme, such as the Work Programme
• members of the armed forces
• family members of the employer living in the employer’s home
• non-family members living in the employer’s home who share in the work and leisure activities, are treated as one of the family and are not charged for meals or accommodation, for example au pairs
• workers younger than school leaving age (usually 16)
• higher and further education students on a work placement up to 1 year
• workers on government pre-apprenticeships schemes
• people on the following European Union (EU) programmes: Leonardo da Vinci, Erasmus , Comenius
• people working on a Jobcentre Plus Work trial for 6 weeks
• share fishermen
• prisoners
• people living and working in a religious community

These rates are not advisory, where they apply, they are compulsory

Responsibility for monitoring that employers “obey” the NLW and NMW regulations falls on HMRC, and they have specific powers to enforce and punish business owners that fail to pay their staff the statutory rates set out above.

On their website, HMRC say:

It’s a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage, or to fake payment records.

Employers who discover they’ve paid a worker below the correct minimum wage must pay any arrears immediately.

HMRC officers have the right to carry out checks at any time and ask to see payment records. They can also investigate employers if a worker complains to them.

If HMRC finds that an employer has not been paying the correct rates, any arrears have to be paid back immediately. There will also be a fine and offenders might be named by the government.

It’s the employer’s responsibility to keep records proving that they are paying the minimum wage – most employers use their payroll records as proof. All records have to be kept for 3 years.

As these rates change annually, it is imperative that employers affected by these regulations review their payroll systems to ensure they are paying the correct amounts and keeping records in the correct format.

From April 2020, HMRC are changing two important tax concessions that apply to landlords letting property that they as owners have previously occupied at some point as their home (Principal Private Residence (PPR)).

The first is the reduction of the present rule that exempts the final 18 months of ownership from any Capital Gains Tax (CGT) charge. From April 2020 it is proposed that this will be reduced to 9 months.

The second change is to letting relief. Presently, if a landlord has previously occupied a rental property, when it is sold the landlord can claim lettings relief.

Briefly, this relief is currently the lowest of:

• The same amount you got in PPR,
• £40,000, or
• The same amount as the chargeable gain you made from letting your home.

The example that illustrates this in action reproduced from the Gov.uk website follows:

Example:

You make a gain of £120,000 when you sell your home, which you owned for 12 years. You lived in the whole property for 6 years, then you let it out in full for 6 years.

You get Private Residence Relief for the time you lived there (6 years). You also get relief for the last 18 months you owned the property, even though you were not living in it.

This means you get Private Residence Relief for 7.5 of the years (62.5% of the time) you owned the property.

You get Private Residence Relief on the same proportion (62.5%) of your gain. This means you will not pay tax on £75,000 of the gain.

The remaining 37.5% (£45,000) of the gain not covered by Private Residence Relief is your chargeable gain.

If you qualify for Private Residence Relief and have a chargeable gain, you may also qualify for Letting Relief.

Because you made a chargeable gain of £45,000 while letting your property (and got £75,000 in Private Residence Relief) you can claim £40,000 in Letting Relief. This means you’ll pay Capital Gains Tax on £5,000.

Change to letting relief from April 2020

From April 2020, lettings relief will still be available, but only if you as the landlord are living in the same property – in shared occupancy – as your tenant.

Action to take before April 2020

If you are already considering the sale of a rental property, that you have previously occupied as your home for a period of time, you may want to consider bringing your plans forward as this may have a positive impact on any CGT payable when you do sell.

We would be happy to help you consider your options, please call if you need advice on this topic.

If you have employees, and if one or more of those employees benefit from the use of facilities that you provide, cheap loans, a company car for example, it is well known that you as their employer will need to inform HMRC of the amount of these benefits following the end of the tax year.

Employers new to this situation would commonly appreciate that these benefits will have an impact on the affected employees’ personal tax, but they may not appreciate that the sum total of all benefits provided – to all their employees – will create an additional employer only, National Insurance Charge (NIC).

The NIC charge is classified as Class 1A contributions and is 13.8% of the total benefits provided.

Accordingly, if you provide a company car to three employees (employees would include directors in most cases) and the taxable benefit is £4,000 for each car provided, then the total Class 1A NIC charge that the company will need to pay is £1,656 (£4000 x 3 x 13.8%).

Compliance with the associated regulations that deal with benefits and assessment and payment of Class 1A NIC are set in stone. There are penalties for not submitting returns to HMRC on-time and penalties and interest if you are late in paying any Class 1a that may be due.

Existing clients that have been through this annual compliance hoop before will no doubt be aware what needs to be done. If you are a new employer, and have provided taxable benefits, we can help you to prepare and submit the employee benefit forms (P11Ds) and the annual P11D(b) return (that informs HMRC how much Class 1A you owe).

Please call if you need assistance with this process.

1 May 2019 – Due date for Corporation Tax due for the year ended 30 July 2018.

19 May 2019 – PAYE and NIC deductions due for month ended 5 May 2019. (If you pay your tax electronically the due date is 22 May 2019)

19 May 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2019.

19 May 2019 – CIS tax deducted for the month ended 5 May 2019 is payable by today.

31 May 2019 – Ensure all employees have been given their P60s for the 2018-19 tax year.

1 June 2019 – Due date for Corporation Tax due for the year ended 31 August 2018.

19 June 2019 – PAYE and NIC deductions due for month ended 5 June 2019. (If you pay your tax electronically the due date is 22 June 2019)

19 June 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2019.

19 June 2019 – CIS tax deducted for the month ended 5 June 2019 is payable by today.

If you are an employer, you have a statutory duty to provide your employees with a copy of their P60 (pay and tax details for 2018-19) on or before the end of May 2019.

If you distribute P60s and then discover that changes need to be made you will need to give employees a replacement P60 – a paper or electronic version – or a letter confirming the change.

This requirement is additional to your other filing deadlines related to your payroll and later in the year you will need to deal with the reporting of expenses and benefits to HMRC.

If we take care of your payroll for you, these matters can be dealt with in a timely manner. If we don’t take care of your payroll, and you would like to be relieved of this tiresome chore, please call so we can discuss your needs.

You will pay Scottish Income Tax if you live in Scotland, Income Tax if you live in England or Northern Ireland and the Welsh Income Tax if you live in Wales.

At present, the only regional variations under the control of the Scottish or Welsh governments are the rates of Income Tax charged.

For 2019-20, the rates set by the Welsh Government are the same as those in England and Northern Ireland. Scottish Income Tax rates have more bands and the higher and top rate are 1% higher than the rest of the UK.

These differences do open up planning opportunities if you live and work in the border areas between England and Scotland.

As you pay tax at Scottish or other UK rates based on where you live, you could choose to live in England and work in Scotland if you pay tax at the higher rates. Obviously, there are many other factors that you will want to consider when choosing where you set up home, but if the regional Income Tax rate differentials start to widen, the ability to reduce your Income Tax burden may become more of a deciding issue.

On the face of it, this sounds implausible. How can you change your will if you have died?

In reality, as long as any beneficiaries left worse off after any change, agree, you can change a person’s will after their death.

Any change must be completed within two years of the death.

The circumstances that such a change can be agreed are to:

• Reduce the amount of Capital Gains Tax or Inheritance Tax payable,
• Provide for someone who was left out of the will,
• Move the deceased’s assets into a trust,
• Clear up any uncertainty over the will.

Executors will need to make a variation to the will to accomplish the above, this will involve:

• Preparing a variation document that satisfies certain legal requirements, and
• If there is more Inheritance Tax to pay, a copy of the variation must be sent to HMRC within six months of making it. This condition does not apply if the variation does not change the amount of Inheritance Tax payable.

This ability to change a will after death can often resolve family disputes if the affected beneficiaries agree. However, the process is best managed by a professional advisor to ensure that all the formalities are dealt with correctly.

The expenses you claim against your property income will need to follow the usual HMRC ruling that the costs must be incurred wholly and exclusively for the purpose of renting out the property.

An example set out on the Gov.uk website illustrates the point:

If you buy a new vacuum cleaner for your own home, and also use it to clean your rental property between tenants, you can’t claim the cost of the vacuum cleaner as an expense against your rental income.

However, you could claim the cost of any cleaning products you bought specifically for cleaning the rental property.

Where costs are incurred partly for your rental business and partly for some other purpose you may be able to claim a proportion of that cost if that part can be separately identified as being incurred wholly and exclusively for the purposes of the property rental business.

Expenses you can and can’t claim are summarised below.

Expenses you can claim include:

• Mortgage interest – a proportion of this cost is now limited to basic rate Income Tax relief,
• General maintenance and repairs to the property, but not improvements (such as replacing a laminate kitchen worktop with a granite worktop)
• Water rates, council tax, gas and electricity
• Insurance, such as landlords’ policies for buildings, contents and public liability
• Costs of services, including the wages of gardeners and cleaners
• Letting agent fees and management fees
• Legal fees for lets of a year or less, or for renewing a lease for less than 50 years
• Accountant’s fees
• Rents (if you’re sub-letting), ground rents and service charges
• Direct costs such as phone calls, stationery and advertising for new tenants
• Vehicle running costs (only the proportion used for your rental business) including mileage rate deductions for business motoring costs

Expenses you can’t claim a deduction for include:

• The full amount of your mortgage payment – only the interest element of your mortgage payment can be offset against your income,
• Private telephone calls – you can only claim for the cost of calls relating to your property rental business,
• Clothing – for example if you bought a suit to wear to a meeting relating to your property rental business, you can’t claim for the cost as wearing the suit is partly for your rental business and partly to keep you warm – no identifiable part is for your property rental business,
• Personal expenses – you can’t claim for any expense that was not incurred solely for your property rental business.