The origins of Individual Savings Accounts (ISA) date back to April 1999. Its precursors, Personal Equity Plan (PEP) and Tax Exempt Special Savings Account (TESSA) go back still further. ISA provides individual investors the encouragement to invest in tax-efficient cash or stocks and shares. In the budget this year, this encouragement went a step further with the announcement of the New Individual Savings Account (NISA). But, what are the new changes and how do I get the best out of this type of Investment?
Until the budget, the rules allowed a limited investment each year into cash and or stocks and shares. This year, for example, you could save up to £5,940 in cash and the same amount in stocks and shares, or up to the full £11,880 in stocks and shares.
From 1st July 2014, the maximum limit for investment has been increased to £15,000, but more importantly, there are no restrictions as to whether investments are in cash or stocks and shares. In addition, you can now transfer from cash to stocks and shares or from stocks and shares to cash – historically it was only possible to transfer from cash to stocks and shares.
Google is offering a free online advertising service, amongst other free online services to charities, via its pay-per-click scheme.
Google for Non-Profits offers organisations access to highly discounted or free products. These tools can help you find new donors and volunteers and get supporters to take action.
Members of Google for Non-Profits will gain access to premium Google products and support, including:
- Google Ad Grants: Free AdWords advertising to promote your website on Google through keyword targeting.
- YouTube for Nonprofits: Premium branding capabilities on YouTube channels, increased uploading capacity and more.
- Google Earth Outreach Grants: Free licensing for Google Earth Pro and Maps API for Business.
- Google Apps for Nonprofits: Free version of Google Apps for Nonprofits
Google also provides suggestions for getting up and running with case studies from other charities who have moved some activities online.
For businesses operating in the digital sector, 1 January 2015 will present the first nasty hangover of the year. VAT changes from this date will apply to electronically supplied services such as broadcasting, telecommunications and e-services (BTE), to those consumers in other member states.
The rules now
The current VAT rules allow businesses supplying these services to private individuals within the EU to pay the usual 20% VAT. Sellers who are not VAT registered count such sales towards the UK threshold of £81,000 and effectively declare no VAT if they operate under the threshold.
The 2015 changes
From 2015, VAT is due in the member state of consumption and charged at local rates of VAT. These will have to be accounted for. The applicable VAT rates across the EU range from three percent on e-books in Luxembourg to 27 percent for standard rated supplies in Hungary, which creates other headaches on pricing. In order to avoid having to set up a VAT status in each member state you sell in (up to 27!), HMRC have introduced a special form allowing the compliance to be dealt with in the UK only and the VAT due in the various member states will be collected by HMRC and divvied out.
Anyone working in the finance department of a charity will currently be wondering what the new Statement of Recommended Practice (SORP) will have in store and when will we finally get to see the final version. After long delays the revised SORP is finally due to come into effect in 2014.
The latest SORP came into force in 2005 and is normally reviewed every five years. But the anticipated update was delayed because the Financial Reporting Council, the body in charge of accounting standards in the UK and Ireland, has been working on a new standard that will bring UK reporting for mid-sized entities into line with international requirements. That process, which began in 2004, was originally intended to take four years and has also been delayed several times.
The development process finally came to an end earlier this year with the publication of the financial reporting standard, FRS102. The upshot is that the existing charities SORP requires revision to bring it up to date.
The Government has decided not to proceed with plans to legislate in Finance Bill 2014 a change in the definition of charity for tax purposes aimed at preventing charities being set up to avoid tax.
The decision follows feedback on a HMRC discussion paper which confirmed that the 2 approaches outlined in the paper, which involve a change to the definition of charity to explicitly exclude charities established to facilitate tax avoidance arrangements, would have a disproportionate and unacceptable effect on the charity sector and legitimate donors. This possible damage to innocent charities and HMRC’s existing and new controls mean that changing the law is not justified at this point.
HMRC say they will continue to monitor the situation and maintain a dialogue with the charities sector for developments or new ideas put forward and the Government will act if it becomes clear that more controls are needed.
Auto-enrolment is the biggest single change to the pension industry in decades.
Introduced as part of the government’s workplace pensions reform in 2012 the legislation is already being rolled to all businesses across the UK.
Download a copy of our ‘Preparing for Auto-enrolment’ guide which will provide you with information on what employers must do to implement auto-enrolment.
Getting auto-enrolment right is vital. Please contact our Wealth Management team to discuss auto-enrolment and your specific business needs.
Tax Case: HMRC’s request to disclose a doctor’s diary was held to be unreasonable.
Dr Kathleen Long is a GP and also runs her own private practice. While HMRC were enquiring into her 2010/11 tax filing, she discovered that she had made an error in the tax return. She explained how the error had arisen at a meeting with the Inspector assigned to the case. The Inspector then wrote to her, asking for further information he said he needed, including a request for a diary containing details of patient appointments.
Dr Long refused to comply with the Inspector’s request.
Last year saw a significant codification of the rules surrounding individual tax residence in the UK. Effective from 6 April 2013, the statutory residence test drew together the strands of legislation, case law, and HMRC guidance and put them onto the statute book.
HMRC have launched an online tool, which could be helpful in determining a person’s residence status in straightforward cases:
In complex situations the online tool may not be clear on the answer and even in apparently straightforward cases there are a number of rules which can catch the unwary.
Please contact Jane Mellor if you would like to chat through any relevant issues.