Our newsletter this month contains the following articles: a light hearted look at HMRC reported tax howlers; a planning issue for elderly, married persons claiming a dependency element in their state pension; a reminder of the changes to the taxation of income from Furnished Holiday Let property; and finally, a warning about trading losses.
HMRC’s director of customer operations recently disclosed that: “Most employers get their PAYE returns right. The few who do not can cause problems for their employees, for example, incorrect deductions of tax.”
Here’s a few examples of a number who did not get their returns right! Based on incorrect returns submitted HMRC now have the following data in their files:
• 40 people were apparently 200 years old or more, according to incorrect dates of birth on their paperwork.
• 824 employees with forenames but the surname recorded as “unknown”.
• 75 people have simply been named “casual”, 11 as “cleaner”, nine as “worker” and six as “students”.
• 572 people are listed as Mr or Mrs X on their PAYE forms.
• 128 staff are known in their workplace as Mr, Ms or Mrs “Dummy”.
“Around 80% of errors in employee data are due to an incorrect name, date of birth or national insurance number; straightforward information that can be collected and checked quite easily.
So, whether you are employing ‘Mr or Mrs J Smith’ – or even ‘Mr or Mrs A N Other’, please use the full and official name on your PAYE paperwork. First names are very important, especially for common surnames.”
State Pension anomaly
Where an older spouse is currently claiming a dependency increase in their state pension, and for a wife or husband who has not yet reached retirement age, they will be advised to review the claim when the younger spouse reaches retirement age.
Issues to be considered include:
Reminder of Furnished Holiday Lets (FHL) changes
The following changes will apply from 6 April 2012
For a let property to qualify as a FHL the following tests will need to be met:
A period of grace election can be made to smooth your lettings history if you have a property that reaches the required criteria in some years but not others.
And don’t forget loss relief changes.
Watch out for persistent losses
Many self-employed traders have suffered losses in recent years as the effects of the banking crisis and recession have slowed economic activity. Some of these business people will have taken on other, perhaps unrelated, part-time jobs to supplement their income?
If you have found yourself in this position be aware that HMRC may challenge your ability to set off losses. For instance:
Tax Diary November/December 2011