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Wednesday, May 04th

Last update:04 May 8:56 GMT

You are here: Business Financial Take care with the VAT switch

Take care with the VAT switch

whitsimpsCare will be needed in the run up to the VAT rate increase on 4th January 2011.  Businesses will need to take care to make sure they charge the correct amount of VAT when invoices are raised or payments received around the date of the change.
Anyone using a flat rate scheme will also need to confirm the new rate to be applied.
If you are considering a substantial purchase, perhaps a motor vehicle and are not able to recover the input VAT making your purchase before 4th January 2011 will mean a saving in the VAT you have to pay.
Pension’s limits simplified
HM Treasury announced on 14 October 2010 that the Annual Allowance will reduce from £255,000 to £50,000 from April 2011.
At first glance this would appear to be bad news but in fact these changes had already bitten for most of those affected. Very complex anti-forestalling rules have frozen contributions for people with taxable income above £150,000 since April 2009 and above £120,000 since  December last year.
So most people with the means to pay in more than £50,000 are already limited to what they were paying in before anti-forestalling or £20,000. Therefore, for some, £50,000 in fact reflects an increase over what they were able to pay this or last tax year.
There is also a new rule allowing unused annual allowances to be carried forward from up to three previous tax years. 
Self-Assessment tax returns
Don’t forget it is now too late to file a paper return for 2009/10 as the deadline was 31st October 2010.  Therefore if you have not filed your return and are required to do so, you will need to file electronically – this is something we would be delighted to help you with!
Revenue issue revised guidance on Domicile and Inheritance tax
HMRC have issued guidance on revisions to their practice in relation to non-domiciled individuals.  Domicile is a difficult subject, but an individual may remain domiciled outside the UK if they were born in another country, or have strong links with there.  This can have a profound impact on their exposure to inheritance tax in the UK and any individuals who may be effected should seek professional advice.