Newly cohabiting parents warned over new tax charge

Newly cohabiting couples, where at least one of the partners is a parent, have been warned by a leading insurer to be aware of a new tax charge, if either earns more than £50,000 a year.

NFU Mutual has said that cohabiting couples need to be aware of the High Income Child Benefit Tax Charge, which sees Child Benefit payments made to either the high earner or his or her partner recouped progressively on income between £50,000 and £60,000.

Notably, the charge applies regardless of whether the higher earner is the parent of their partner’s child and regardless of whether the couple is married, civil partnered or cohabiting.

Another feature of the charge is that it applies to one partner’s income, meaning that a couple with a combined income of nearly £100,000 would not be subject to the charge, while a couple with an income of £50,000 from only one partner would be subject to the charge.

While parents can opt-out of receiving Child Benefit, stay-at-home parents of children aged up to 12 can qualify for National Insurance credits that contribute towards their entitlement for the state pension.

Link: The hidden tax bill a new partner could bring

Spanish holiday home owners cautioned over post-Brexit tax impact

With the UK currently set to leave the EU by the end of January 2020, anyone who owns a Spanish holiday home needs to be prepared for the impact of Brexit on taxation.

Spanish tax law makes specific provision for EU/EEA residents that benefits people living in member states over others from outside the EU bloc. In some cases, this is expected to lead to a considerably increased Spanish tax bill.

The changes Spanish holiday home owners are likely to face include:

  • Higher tax on rental income with no deductions allowed in respect of costs
  • Higher tax on deemed rental income
  • Compulsory use of the state system for inheritance
  • Loss of capital gains tax benefits
  • Loss of deferral on exit tax
  • New 10 per cent tax on dividend paid to a UK company that owns less than a 10 per cent share of a Spanish company

If you have a Spanish holiday home, it is vital that you start planning for the effects of Brexit now.

Link: How Brexit will affect the taxation of Spanish holiday homes

Countdown to the 31 January Self-Assessment Tax Return deadline begins

Fewer than 100 days now remain until the 31 January 2020 deadline for the online submission of Self-Assessment Tax Returns.

Self-Assessment Tax Returns must be completed in respect of most income that has not been subject to PAYE. This includes the following groups:

  • Self-employed individuals
  • Sole traders
  • Partners
  • Individuals in receipt of rental income
  • Individuals in receipt of tips and commission
  • Those with income from savings, investments and dividends
  • Individuals in receipt of overseas income

Additionally, this year, people who are liable for the High Income Child Benefit Charge (HICBC) may need to file a Self-Assessment Tax Return. This generally applies to people with an income of £50,000 or more.

Anyone who misses the 31 January deadline for online filing and payment will be subject to penalties from HM Revenue & Customs (HMRC) beginning at £100.

Angela MacDonald, HMRC Director General for Customer Services, said: “The deadline for completing Self-Assessment Tax Returns is only 100 days away, yet so many of us wait until January to start the process. Avoid the last-minute rush by completing your tax returns on time and then enjoy the upcoming festive period.

“We want to help people get their tax returns right – starting the process early and giving yourself time to gather all the information you need will help avoid that stressful, late rush to file.”

Link: 100 days to self-assessment tax return deadline