HMRC’s latest update includes information on EU Exit changes for UK self-employed workers working in the EU, EEA or Switzerland in a no deal situation, protecting the State Pension, the extension of non-UK resident CGT on UK property or land, and the disguised remuneration loan charge.
HMRC produces regular Agent Updates, which whilst they are aimed mainly at accountants and tax advisers, can also provide helpful insights into issues clients may be talking about to their financial advisers. Here’s a selection of what’s covered in HMRC’s latest Agent Update:
Changes for UK self-employed workers working in the EU, European Economic Area (EEA) or Switzerland in a no deal situation
Currently the EU Social Security Coordination Regulations ensure workers only need to pay social security contributions (such as National Insurance contributions in the UK) in one country at a time. However, if we leave without a deal, the coordination between the UK and the EU may end. This will mean UK self-employed workers working in the EU, European Economic Area (EEA) or Switzerland may need to make social security contributions in both the UK and the EU, the EEA or Switzerland at the same time.
- UK self-employed workers currently working in the EU, the EEA or Switzerland who have a UK-issued A1/E101 form, will continue to pay UK National Insurance contributions for the duration of the time shown on the form.
- If the end date on the form goes beyond the day the UK leaves the EU, they will need to contact the relevant EU/EEA or Swiss authority to confirm whether or not they need to start paying social security contributions in that country from that date. The European Commission’s website provides information on the relevant country’s authority.
- The position for UK or Irish national self-employed workers working in Ireland will not change after the UK leaves the EU. They will be covered under the international agreement signed by the UK and Ireland in February 2019 and will not need to take any action.
- A replacement for the A1/E101 form will be issued for new applications after the UK leaves the EU. This ensures UK self-employed workers will continue to make UK National Insurance contributions to maintain their social security record. They can still use the same form on GOV.UK to make an application after the UK has left the EU.
To protect UK nationals in the EU in a ‘no deal’ scenario, the Government is reaching reciprocal arrangements with the EU or Member States to maintain existing social security coordination for a transitional period until 31 December 2020. Individuals in scope of these arrangements will only pay social security contributions in one country at a time. Further information about sending workers to the EU in a no deal situation is available on GOV.UK.
Annual Tax on Enveloped Dwellings (ATED)
If your client owns a property within ATED on 1 April 2019, a return must be submitted by 30 April 2019 to avoid incurring a late filing penalty. More information on ATED chargeable amounts and how and when to submit an ATED return is available under ‘Annual Tax on Enveloped Dwellings guidance’ on GOV.UK.
Help clients protect their State Pension
Making a claim to Child Benefit can help protect entitlement to the State Pension. It is paid to a person who is responsible for a child under 16 (or under 20 and in approved education or training). In addition to the payments, until the child is 12 years old a Child Benefit award also provides National Insurance Credits to the person who made the claim. These National Insurance Credits can help protect entitlement to the State Pension.
Only one person can claim Child Benefit for a child. For couples with one partner not working or paying National Insurance contributions, making the claim in their name will help protect their State Pension. Even where the working partner claims Child Benefit, there is scope to transfer the National Insurance Credits and change who gets Child Benefit to protect the non-working parents State Pension.
If a client receives Child Benefit payments, and they or their partner’s income is over £50,000, they may have to pay the High Income Child Benefit Charge. However, individuals may claim Child Benefit and choose not to receive the payments, which means they do not have to pay the charge but still receive the associated National Insurance Credits and protect their State Pension.
Extension of non-UK resident capital gains tax (CGT) on UK property or land
From April 2019, more disposals of interests in UK property or land by non-UK residents have been brought into the charge to UK tax. Residential property disposals by non-UK residents have been liable to CGT since April 2015. Disposals of non-residential property or land have now become liable, to CGT from 6 April 2019 and to corporation tax on gains from 1 April 2019.
The following clients need to complete a non-resident CGT return when they sell or dispose of UK property or land. HMRC must be notified within 30 days of the conveyance date using HMRC’s online form:
- a non-resident individual;
- personal representative of a non-resident who has died;
- a non-resident who is in a partnership;
- a non-resident landlord or trustee (although this does not apply to non-resident corporate landlords as normal corporation tax time limits for notifying chargeability and payment will apply);
- a UK resident meeting split year conditions and the disposal is made in the overseas part of the tax year.
A new charge also applies for non-UK residents’ gains on indirect disposals of interests in UK property, such as selling the shares in a company that derives 75% or more of its gross asset value from UK land.
Changes to instalment payments for very large companies
For accounting periods beginning on or after 1 April 2019, companies with taxable profits exceeding £20m will be required to make payments four months earlier. For a 12-month accounting period, payments will be due in months 3, 6, 9 and 12 of the current accounting period, instead of months 7, 10, 13 and 16 after the start of the accounting period. The £20m threshold is reduced where the company is a member of a group and is pro-rata’d for accounting periods shorter than 12 months. The first instalment payment under the new rules will be due before the final payment under the current regime and will impact on cash flow in the first year.
The disguised remuneration loan charge
The disguised remuneration loan charge came into effect on 5 April 2019. If a client used a disguised remuneration scheme to avoid paying tax and National Insurance contributions, and they did not settle by 5 April 2019, or they are not in the settlement process, there will be a loan charge to pay.
Where all necessary settlement information was provided to HMRC by 5 April 2019, and any actions HMRC require are satisfied by the dates that they give in correspondence, the current settlement terms will remain available and the loan charge reporting and accounting requirements will not apply. For anyone who will have difficulty paying their settlement liability HMRC can agree to spread payments over a number of years. More information can be found on the ‘Disguised remuneration: settling your tax affairs’ webpage on GOV.UK.
Where settlement is not reached, any outstanding loans must be reported as employment income arising on 5 April 2019. Details of the loan charge reporting requirements are available in Agent Update 70, and further guidance on the reporting requirements, can be found on the ‘Report and account for your disguised remuneration loan charge’ webpage on GOV.UK.
For full details please see HMRC’s Agent Update 71.
Please note that this document was prepared by a third party and as such Brewin Dolphin is not responsible for the content or able to answer queries on the topics dealt with. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Therefore you should not rely on this information without seeking professional advice from a qualified tax adviser, who should also be able to assist you with any questions on the content.
This document was prepared as a general guide only and does not constitute tax or legal advice.