Dean Statham

Dean Statham Tax Alert

Compulsory online filing VAT returns

This alert is a reminder to all our business clients with VAT able turnover in excess of £100,000 per annum, that from 1 April 2010 they will need to file their VAT return online.

It is presently estimated that only 14% of businesses have volunteered to register for online filing.

From 1 April 2010 at least 65% of all VAT registered businesses will need to register.

We suggest that you pre-empt the last minute rush, early 2010, and register now.

There are two concessions to VAT traders who do file online:

1. You get an additional 7 days to file your return, and
2. A further 3 working days to pay any VAT due.

And of course you won’t have to worry about postal delays.

If you are computer challenged we would be more than happy to set this up for you. Please call to discuss.

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Business loss relief extended

Companies

The loss relief carry back announced last year has been extended. Companies will now be permitted to carry trading losses arising in accounting periods ending between 24 November 2008 and 23 November 2010 back against total taxable profits of the three preceding years.

This relief will operate alongside the current 12 month carry back, which has always been available. Losses will be set against the most recent periods first, only going back to earlier periods when the profits of the later year have been exhausted.

There is a limit of £50,000 (in total) on the losses carried back to the earlier two years of the three (years 1 and 2), but no restriction on the relief against the latest year (year 3).

Claims for repayment can be made from 22 April 2009 in respect of corporation tax accounting periods which have ended.

Income tax businesses

The rules for income tax businesses are largely similar to the corporation tax rules, but there are some important key differences. The £50,000 limit and the principle of addressing more recent years first are common to both regimes.

The extended loss relief is available for losses incurred in accounting periods forming the basis periods for 2008/09 and 2009/10.

The method of relief is also different for income tax businesses, as the extended loss carry back is only against profits of the same trade and not total income.

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Update for high income earners

Approximately £7bn will be raised from this Budget from high income earners in the UK!

The sting will be administered in three pronged attack via higher tax rates, stripping away of personal allowances and restricted pension relief.

Super-tax at 50%

In a surprise move Chancellor Alistair Darling confirmed the new 'super-tax' rate for those who earn over £150,000 will come in a year earlier than expected and be 50% rather than the previously proposed 45%. So those on higher incomes have less than one year, until 6 April 2010, to consider their options before facing the highest tax rate in two decades. Coupled with national insurance contribution increases that are scheduled from April 2011, the new highest tax rate will be 51.5% for employees.

Personal allowances taper away

Any individual earning a six-figure income will see their personal allowance begin to taper away with effect from 6 April 2010.

Any basic personal allowance will be reduced by up to 100%, at the rate of £1 for every £2 of income above £100,000. Based on the current personal allowance of £6,475, this would mean the full allowance would be extinguished at an income level of £112,950.

Pension pain

A further blow for higher earners is the announcement of a restriction on the availability of higher rate tax relief on pension contributions with effect from 6 April 2011, for individuals with taxable income in excess of £150,000.

What to do?

If you feel you may be affected by these issues there is still time to look at your planning options. Please call for further advice.

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DISCLAIMER - PLEASE NOTE: The ideas shared with you in this email are intended to inform rather than advise. Taxpayers circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Dean Statham,
29 King Street, Newcastle, Staffs, ST5 1ER.
Tel: 01782 614618  Fax: 01782 717287.
Web: www.dsonline.co.uk.

Dean Statham is a limited liability partnership, registered for VAT under reference 812 0016 96. Partners in the firm are members of the Institute of Chartered Accountants in England and Wales (ICAEW). This body has its headquarters in the UK and its rules of professional conduct can be obtained from its web site.

Dean Statham are authorised to act as statutory auditors by the ICAEW.