Tax Update Bulletin - November 2007

1. 2008/09 Proposed Tax and NIC Rates and Allowances

H M Treasury announced on the 18 October 2007 proposed rates for 2008/09, to take effect 6 April 2008. The main rates are as follows:

Personal Allowance                                     £5,435                            (4% increase)
Personal Age Allowance (under 75)            £9,030                      (19.6% increase)
Personal Allowance (age 75 and over)       £9,180                      (19.4% increase)
Class 1 National Insurance
Upper earnings limit                                   £770 pw                      (14.9% increase)
Class 2 National Insurance
Weekly rate                                                   £2.30                        (4.6% increase)
Class 3 National Insurance
Weekly rate                                                   £8.10                        (3.9% increase)
Class 4 Upper profits limit                          £40,040                      (14.9% increase)
Basic state pension single person                £90.70                       (3.9% increase)

2. Benefits in kind

H M Revenue & Customs are currently considering whether to transfer the taxation of benefits in kind onto the normal payroll, in an attempt to try and abolish forms P11D but at this stage much more work is required to try and achieve this.

3. S A Tax Returns

From April 2008 the look of this return will alter and will broadly become a smaller basic return with more supplementary pages.

4. Northern Rock ISA’s

If monies were withdrawn from Northern Rock ISA’s between 13 September 2007 and 19 September 2007 inclusive, then in order to restore the ISA’s tax free status, by 5 April 2008 funds must either have been returned to a Northern Rock ISA or a certificate obtained from Northern Rock for the amount of the cash ISA savings withdrawal between the above two dates, and this can then be presented to a new cash ISA provider when depositing money with them. Currently subscriptions over £3,000 are not covered by these rules as they don’t qualify in any event as they exceed the annual limit.

5. Deceased persons tax penalties

H M Revenue & Customs have now announced that they will not charge penalties to deceased persons if there is a default by the tax payer who has since died and this is now in line with the European Convention on Human Rights.


6. Construction Industry monthly returns

From October 2007 penalties have been charged for late monthly CIS returns. This should not be on a cumulative basis, so for example, if no returns have been made since April 2007 when the new system came in, in October 2007 you should receive 7 penalty notices not 28 penalty notices. It is noted that cheques in relation to tax deducted under this scheme, should be sent to H M Revenue & Customs Accounts Office and not with the monthly returns. It is also noted that original returns should be sent to H M Revenue & Customs, although they do accept photo-copied returns as a last resort. It has also been noted that H M Revenue & Customs are sympathetic to returns filed late in October, due to the postal strike.

7. P35 Penalties 2006/07

H M Revenue & Customs apologised for penalties issued in error with regard to the above Annual Returns, which had mainly been issued where on-line returns were filed on 17 May 2007 and this was not noted on the H M Revenue & Customs system. H M Revenue & Customs should be cancelling these penalties centrally and sending letters out to all employers to explain and apologise accordingly. If an on-line receipt has been received by 28 May 2007 then no appeal should be necessary, but it is recommended that an appeal is made if H M Revenue & Customs have not yet cancelled the penalty under these circumstances.

8. VAT Registration

There continues to be delays on H M Revenue & Customs part in this connection. They have now broadly centralised registration to Wolverhampton to which all VAT registrations should now be sent. It is hoped that by the end of January 2008 the service should be back to how it was approximately a year ago, with an acceptable time scale involved.



Should you have any questions arising from this article, please contact Lentells.