Double Duty-Free Allowance for Travellers Returning to the UK

Travellers can now bring back more than double the amount of gifts and souvenirs from outside the EU without paying UK duty. From 1st December, the tax and duty-free allowance increased from £145 to £300, with a further increase to £340 in January to take account of recent changes in the sterling/euro exchange rate.

Following a proposal from the then Chancellor of the Exchequer Gordon Brown to the European Commission in 2004, the Government is today announcing an increase to the allowance for what are known as ‘other goods’, which includes souvenirs, clothing, electrical goods and perfume.

Travellers and holiday makers will also be able to bring back more alcohol, with a new allowance for beer of 16 litres and a doubling in the allowance of still wine, from two to four litres.

Financial Secretary to the Treasury, Stephen Timms, said today:
“This new rate for all EU member states will be a welcome boost to holiday makers and all others travelling outside the EU. The changes stem from an initiative by the then Chancellor, Gordon Brown, and demonstrate the benefits of the UK working at the heart of Europe. “

Calculating VAT on Leases From 1 December 2008

Changes to VAT announced in the Pre Budget Report 2008 affects the calculation of the net present value (NPV) where VAT is charged on the rent.

When calculating VAT, the tax point for rental payments is the date on which a VAT invoice is issued or a payment is received, whichever is the earlier. The rate that is in force at the tax point will be the rate that applies.

Effective date of lease on or after 1 December 2008

If the effective date of the grant of a lease is on or after 1 December 2008 you should estimate the NPV using the following VAT rates:

• 15 per cent to 31 December 2009
• 17.5 per cent from 1 January 2010

Effective date of lease on or after 1 January 2010

Where the effective date of the lease is on or after 1 January 2010 the VAT rate of 17.5 per cent will apply.

VAT changes result in a variable or uncertain rent

As a result of the VAT changes at Pre Budget Report 2008 rents which include VAT in the NPV calculation will be viewed, for Stamp Duty Land Tax (SDLT) purposes, as rents which are variable or uncertain.

When the amount of rent payable for the first five years of the term of the lease becomes certain the purchaser can review the NPV payable on the rent and submit a return to HM Revenue & Customs (HMRC). At that point if NPV calculation was based on the VAT rate of 17.5 per cent and resulted in an overpayment a claim for repayment can be made.

When the VAT rate returns to 17.5 per cent again on 1 January 2010 HMRC will treat this type of rent as certain. A new return is not required if the SDLT estimated in the earlier return was correct. Finance Act 2003 Sch17A Para 8 (1)(b) deals with cases where rents cease to be uncertain

Repayments of overpayments

It is likely that claims for SDLT repayment will be small for example we estimate that on an annual rent of one million pounds the repayment would be less than £250. We do not intend to make any repayments before January 2010 except where the lease ends before 31 December 2009.

If the fifth year of the lease ends before 31 December 2009, any claim for repayment of overpaid tax should be made within thirty days of the date when the rents for the first five years of the term become certain. Interest will be paid on repayments on the usual basis.

Making a claim for repayment

To make a claim you should write to: The Compliance Team, Birmingham Stamp Office, 9th Floor, City Centre House, 30 Unioin Street, Birmingham, B2 4AR. Letters should be headed ‘VAT on leases- overpayment claim’.

For more help with VAT why not get in touch and see how Davenports can help you.

HMRC Business Payment Support Service

From 24 November 2008, HM Revenue & Customs (HMRC) have introduced a new, dedicated Business Payment Support Service designed to meet the needs of businesses affected by the current economic conditions.

If you’re worried about being able to meet tax, National Insurance or other payments owed to HMRC, or you anticipate that payments coming due will cause you problems, you can contact them to discuss payment options to help you deal with temporary cashflow difficulties.

The information below will help you decide whether you need to contact HMRC now. If you do need to phone them you can call our Business Payment Support Line which is open seven days a week.

Their staff will review your circumstances and discuss temporary options tailored to your business needs, such as arranging for you to make payments over a longer period. They will not charge additional late payment surcharges on payments included in the arrangement, although interest will continue to be payable on those taxes where it applies.

Getting in touch with the Business Payment Support Service

If you have payments due soon, please contact them - the sooner you do so, the sooner we’ll be able to see how they can help. In most cases HMRC should be able to give you a decision in about 10 minutes. For larger payment debts and those that are more complicated they may need to have a longer, more detailed discussion with you and may need to call you back before finalising payment arrangements.

If your payment is not due yet, you can ring the Business Payment Support Line nearer the time and as soon as you are clear about whether you will be able to pay or not. But remember that you need to contact HMRC in advance. Don’t wait until your payment is overdue.

HMRC Business Payment Support Line
Tel 0845 302 1435       

Open Monday - Friday 8.00am to 8.00 pm, Saturday and Sunday 8.00 am – 4.00 pm.

Please note: The Support Line is intended for new enquiries only.

Increases in Personal Allowances, Child Benefits and Tax Credits

Changes before April 2009

• The increase in Child Benefits will be paid from 5th January 2009 instead of 6th April 2009. The new amounts will be £20.00 per week for the first or only child and £ 13.20 per week for subsequent children

Changes from April 2009

• The basic personal allowance for 2008/09 of £6035 will increase by indexation plus a further £130 to £6475 from 6 April 2009. This is equal to a weekly amount of tax free income of £116.
• The basic rate of income tax (20 per cent and higher rate 40 per cent ) remain unchanged, but the basic rate tax band is increased by indexation plus an additional £800 from £34,800 to £37,400.
• All other personal allowances, the income limit for age-related allowances, the minimum amount of married couple’s allowance and the starting rate limit for savings will be increased by indexation.
• The child element of the Child Tax Credit will increase by £75 above indexation from April 2009. This includes the extra £25 which has been brought forward from April 2010.
• Working Tax Credits and Guardians Allowance are being increased in line with indexation from April 2009.

Changes from April 2010

• The amount of basic personal allowance has not been set, but from 6 April 2010 the allowance will be subject to income limits of £100,000 and £140,000.
• This will mean that where an individual’s income is below the £100,000 income limit, they will continue to be entitled to the full allowance.
• Where an individual’s income is above the income limit of £100,000,the allowance will be reduced by £1 for every £2 above the income limit up to a maximum of one half of the basic personal allowance.
• Where an individual’s gross income is above a second income limit of £140,000, the amount of their allowance will be further reduced by £1 for every £2 above the income limit up to a maximum of the full amount of the basic personal allowance.

Changes from April 2011

• From 6 April 2011 taxable non-savings and savings income above £150,000 will be liable to income tax at a new rate 45 per cent.
• Dividends otherwise taxable at the new 45 per cent rate will be liable to income tax at a new rate of 37.5 per cent and the Trust rate will also increase to 45 per cent.
• The main rate of Class 1 and Class 4 NICs will be increased by 0.5 per cent to 11.5 per cent and 8.5 per cent respectively.
• The Class 1 employer rate of NICs will be increased by 0.5 per cent to 13.3 per cent. The increased rate will also apply to Class 1A and Class 1B contributions.
• The additional rate of Class 1 and 4 NICs will be increased by 0.5 per cent to 1.5 per cent.

Darling Cuts the Standard Rate of VAT

The Chancellor has annouced today during his Pre-Budget Report a cut in the standard rate of Value Added Tax as expected.

The cut reduces the current rate of VAT from 17.5% to 15%, from 1st December 2008 temporarily, for 13 months until January 2010, after which the rate will be increased back to 17.5%

For more information about VAT, please contact us.

Pre-Budget Report 2008 Accounced

The Chancellor has announced that he will deliver his Pre-Budget Report (PBR) to Parliament on Monday 24 November at 3.30pm.

Full details of all of his announcements which will affect taxes will be published on this site after he finishes his speech.

How customers of Icelandic banks can access their funds

Do you bank in Iceland?

Business Link, BERR, and HM Treasury have worked together to answer your questions

Important Definitions
The arrangements are different for depositors who are eligible for compensation from the Financial Services Compensation Scheme (”retail” depositors) and those who are not, so it is important that you understand which description applies to you.

The Financial Servcies Compensation Scheme (FSCS) covers most private individuals and small businesses and some charities according to rules set by the Financial Services Authority (FSA).

The general criteria from the FSCS is that to be defined as a smaller company two of the following need to apply to you:

• your turnover should not exceed £6.5 million
• your balance sheet total should not be more than £3.26 million
• your total number of employees should be less than 50

The criteria for eligibility are set out in more detail in Chapter 4 of the Financial Services Authority (FSA) Compensation Sourcebook, which is part of the FSA Handbook. You can find the FSA Compensation Sourcebook on the FSA website. You can also find information regarding your criteria on the FSCS website or by phone   020 7892 7300  .

If you meet the FSA’s criteria you are eligible for compensation from the FSCS and are referred to as “retail” depositors below.

Questions and Answers

• Will I be able to access funds?
• I have deposits of over £50,000 with one of the banks, have we lost our money?
• How and when can I access my money?
• Exactly what transactions are allowed and what aren’t?
• One of my customers claims to be affected by the crises and is using this as an excuse not to pay me. How do I check? Can I still invoke my statutory late payment rights?
• Who do I speak to if I have questions not addressed by the answers above or I want more detail?

1. Will I be able to access funds?

The Chancellor has put in place arrangements to ensure that all retail depositors in the Icelandic banks of Landsbanki (including their “Icesave” products), Heritable, and Kaupthing Singer and Friedlander (including their “Edge products”) will receive their money in full.

The following information applies to retail depositors only.

Heritable

Deposits in Heritable have been transferred to ING Direct. These products include the two, three, four, and five year fixed-rate bonds, easy access, online saver, direct saver, 50 plus saver, and the 60, 90 and 120-day notice accounts. You can continue to access your account in the same way as you did previously.

The FSCS understands that a small number of eligible Heritable depositor accounts have not transferred to ING Direct. If this applies to you, you will receive your money in full by applying to the FSCS. The FSCS will be sending these account holders an application form to claim compensation shortly.

Find more details on the FSCS website or by phoning   0207 892 7300  .

Kaupthing Singer & Friedlander

All deposits in Kaupthing under the “Edge” brand have been transferred to ING Direct. You can continue to access your account in the same way as you did previously.

Find more details on the ING Direct website.

A small number of eligible Kauthping depositor accounts have not been transferred to ING Direct. If this applies to you, you will receive your money in full by applying to the FSCS.

Find more information on the FSCS website or by phoning   0207 892 7300  .

Icesave

All retail depositors in Icesave will receive their money in full. The Government is working with the Icelandic Authorities to clarify the position of Icesave and the Financial Services Compensation Scheme are putting in place practical arrangements to allow depositors to receive their money as quickly as possible.

Arrangements are being put in place to ensure that all ISA customers of Icesave will continue to benefit from the tax-free status of their accounts.

The following information applies to all other depositors.

Heritable

Heritable, the UK subsidiary of Landsbanki, is in administration in the UK. Any creditor should contact Heritable on   020 7493 6621  .

Kaupthing Singer & Friedlander

The UK subsidiary of Kaupthing also in administration in the UK and creditors should contact the call centre there on   08451 31 32 33   or   08451 31 32 34  .

Landsbanki and Glitner

Both Landsbanki and Glitner are in receivership in Iceland. The Government is working with the Icelandic authorities to establish what this means for UK creditors.

We will update this site as soon as further information is available.

2. I have deposits of over £50,000 with one of the banks, have we lost our money?

The following information applies to retail depositors only.

If you are an FSCS eligible depositor (as defined above) in the Icelandic banks of Landsbanki (including their “Icesave” products), Heritable, and Kaupthing Singer and Friedlander (including their “Edge products”) you will receive your money in full.

The following information applies to all other depositors.

Heritable

Heritable, the UK subsidiary of Landsbanki is in administration in the UK. Any creditor should contact Heritable on   020 7493 6621  .

Kaupthing Singer & Friedlander

The UK subsidiary of Kaupthing also in administration in the UK and creditors should contact the call centre there on   08451 31 32 33   or   08451 31 32 34  .

Landsbanki and Glitner

Both Landsbanki and Glitner are in receivership in Iceland. The Government is working with the Icelandic authorities to establish what this means for UK creditors.

We will update this site as soon as further information is available.

3. How and when can I access my money?

Heritable

If your funds have been transferred to ING Direct you can continue to access your account in the same way as you did previously.

If you are an FSCS eligible depositor but your account has not been transferred to ING Direct you will receive your money in full by applying to the Financial Services Compensation Scheme (FSCS). The FSCS will be sending these account holders an application form to claim compensation shortly.

Find further details on the FSCS website or by phoning   0207 892 7300  .

If you are not FSCS eligible, the UK subsidiary of Landsbanki is in administration in the UK. Any creditor should contact Heritable on   020 7493 6621  .

Kaupthing Singer & Friedlander

All deposits in Kaupthing under the “Edge” brand have been transferred to ING Direct. You can continue to access your account in the same way as you did previously.

Find further details on the ING Direct website.

A small number of eligible Kauthping depositor accounts have not been transferred to ING Direct. If this applies to you, you will receive your money in full by applying to the Financial Services Compensation Scheme (FSCS).

Find further details on the FSCS website or by phoning   0207 892 7300  .

If you are not FSCS eligible, The UK subsidiary of Kaupthing is also in administration in the UK and creditors should contact the call centre there on   08451 31 32 33   or   08451 31 32 34  .

Icesave

All retail depositors in Icesave will receive their money in full. The Government is working with the Icelandic Authorities to clarify the position of Icesave and the Financial Services Compensation Scheme are putting in place practical arrangements to allow depositors to receive their money as quickly as possible.

Arrangements are being put in place to ensure that all ISA customers of Icesave will continue to benefit from the tax-free status of their accounts.

Landsbanki and Glitner

Both Landsbanki and Glitner are in receivership in Iceland. The Government is working with the Icelandic authorities to establish what this means for UK creditors.

We will update this site as soon as further information is available.

4. Exactly what transactions are allowed and what aren’t?

If your funds are with Landsbanki the following applies to you.

On 8 October 2008, the UK Government froze funds owned, held or controlled by the Icelandic bank Landsbanki, including those owned, held or controlled in relation to that bank by the relevant Icelandic Authorities or the Government of Iceland. This was to help ensure that UK wholesale depositors of Landsbanki are treated fairly.

The Treasury has issued a general licence providing for certain exemptions to the asset freeze in order to ensure that the asset freeze does not adversely impact on businesses and other customers of the bank.

Enquiries can also be directed to the Asset Freezing Unit at HM Treasury:
e-mail: assetfreezingunit@hm-treasury.gsi.gov.uk, fax: 020 7451 7677,
telephone:   020 7270 5664   or   020 7270 5454  .

The legal obligations arising from the freezing order are set out in the following documents:

(1) The Landsbank Freezing Order 2008. Find the Landsbank Freezing order on the Office of Public Sector Information website.

(2) Licences issued by HM Treasury to provide for authorised exemptions to the asset freeze. Download information on licences to provide for authorised exemptions to the asset freeze from the HM Treasury website.

5. One of my customers claims to be affected by the crises and is using this as an excuse not to pay me. How do I check? Can I still invoke my statutory late payment rights?

Ask your customer to give you some evidence that they are affected - they should be able to show you a statement from one of the banks listed above with their own company name on it. You will then be able to use the information above to work out how they are likely to be affected or whether it is just an excuse for delaying payment. This does not affect your statutory late payment rights.
6. Who do I speak to if I have questions not addressed by the answers above or I want more detail?

• ING Direct - find details of how transfers will be managed on the ING Direct website.
• Financial Services Compensations Scheme - find further detail on the FSCS website or by phoning   020 7892 7300  .
• If you are a creditor and have any queries with regards to your accounts with Hertiable you should contact Heritable on   020 7493 6621  .
• If you are a creditor and have any queries with regards to your accounts with Kaupthing you should contact the call centre there on   08451 31 32 33   or   08451 31 32 34  .
• Any businesses that have banking issues related to the assets freeze that are not addressed by the current general licence should contact the Asset Freezing Unit at HM Treasury using the following email address: assetfreezingunit@hm-treasury.gov.uk.