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HMRC Actively Targets Property Tax Cheats

Understanding Capital Gains Tax and Property Tax

HMRC reveals that a new taskforce in the North West and North Wales has been set up to target property owners who “sold one or more properties and haven’t paid Capital Gains Tax or disclosed rental income” – with an expected £5 million to be recouped. How can YOU make sure that you don't fall foul of Mr Taxman?

Since their inception in 2011-12, HMRC’s taskforces have already recovered over £190 million in unpaid tax, £12 million of which being directly attributable to the property rental sector in London, south east England and Yorkshire. The overall target is set to bring in over £100 million during the current financial year. Jennie Granger, Director General of Enforcement and Compliance explains: “The people being targeted (...) have no intention of playing by the rules and could end up facing a heavy fine or even a criminal conviction”, citing as examples the recent and successful prosecutions of a barrister from London and a property consultant from Hertfordshire, who both were found guilty of property tax evasion – and who should have known better, given their status. The warning is crystal clear, “If you haven’t declared all your income, we will find you and investigate”.

Ultimately, it is down to you to ensure you comply with the tax system and abide by Capital Gains Tax regulations.

What is Capital Gains Tax?

In short, it is the tax that is due on the gain (not the monetary value) which is generated by the sale or disposal of an asset. While selling your car or your main home is exempt from CGT, the monetary gain from the sale of a secondary home or land is taxable, at a rate of either 18 or 28%, depending if you are a lower or higher rate tax payer. The annual exemption means that under current rates, you are not liable to pay any CGT for the first £10,900. As a broad example, if you sold a flat (which is not your main home) and made a gain (or profit) of £20,000 between the time you purchased it and sold it, your liability under CGT at the lower rate would be: £20,000 minus £10,900 tax-free annual exemption = £9,100 gain x 18% = £1,638. Of course, certain expenses you might have incurred for the property would need to be taken into consideration and could justifiably minimise your gain, and therefore lower your overall tax liability. Various tax reliefs and depreciation costs could also come into play, which is why it is always best to seek the advice from a reputable accountant or tax adviser (like TaxRefundPro) in order to work out the tax due – and minimise it within the rules.

The essential thing is to declare all sources of income and play fair to ensure your tax affairs are in order and beyond reproach. So if you are a property owner or a landlord and you receive rental income, declare it. Depending on the amounts you receive, you may not even be liable to pay any tax, but it is definitely worth checking out first rather than ignoring the rules. The cost of paying an accountant or a tax adviser to help with your tax return will not only give you peace of mind but in some cases should pay for itself when considering the tax you might save as a result.

TaxRefundPro’s tax return services include a free, confidential and no obligation assessment of your case by our qualified accountants. Our typical costs start from only £99+VAT per tax return. Call one of our consultants for a quote on 0203 137 5773.

How to Recognise Bogus Emails Claiming To Be From HMRC…

online tax return reminders from HMRC

This month, HMRC is due to send 650,000 tax return reminders by email to tax payers, following the recent launch of HMRC’s digital Self Assessment service and in an effort to replace costly paper notices and letters. On the other hand, unscrupulous individuals are targeting taxpayers by mass-emailing bogus notices claiming to come from HMRC. So how do you distinguish between genuine communications from HMRC and phishing scams?

How to differentiate between HMRC's genuine emails and scams

HMRC published a ‘Three-Point Protocol’ to help taxpayers differentiate between genuine emails and those sent by scammers.

First, HMRC emails will only contain generic reminders (like “”File your tax return and pay your bill by 31 January”) or notifications about a key change or event (for example if you have made a payment or your tax code has changed).

Secondly, HMRC will NEVER include financial information like details or amounts of outstanding payment or refunds. They will never include active links related to a customer’s account, log-on pages or electronic forms or active links outside HMRC or GOV.UK.

Thirdly, HMRC’s emails will always display the department’s logo and the customer’s full name, as held on their database. Also, it is worth pointing out that HMRC’s emails are not a two-way service as genuine HMRC reminders do not allow a response. However, 2-way communication is something currently being developed for future use.

Very often, scammers’ emails will promise a tax refund or acknowledge a payment of some sort. In some cases, these bogus emails are quite convincing and even display HMRC’s logo. However, a tell-tale sign that they are a scam is that they will contain attachments or ask you for personal details. Whatever you do, please do NOT open any of the attachments as they may contain harmful files, malware, Trojan and all other nasty viruses… Don’t fall victim to scammers, these bogus emails are what we call a “phishing scam”, designed to capture your personal data in order to steal money from you.

HMRC takes the online security of taxpayers very seriously. Says Jonathan Lloyd White, HMRC’s Director of Security and Information, “While we want customers to transact with us online, we also want to keep their confidential information safe and secure. So we’ve developed this simple protocol to help our customers avoid being caught out by scam emails.

Should you receive suspicious email communications claiming to be from HMRC, and which requests a specific payment or offers a tax refund, you are encouraged to forward them to This email address is being protected from spambots. You need JavaScript enabled to view it. so they can be properly investigated.

TaxRefundPro will never email people who are not clients or have never used our services. Unless you specifically retained our services, we will never make the promise that you are due a tax refund, either. Online security is a priority and we will never pass on clients’ personal info to any third party, that’s a promise. Sometimes, we may email clients who agree to receive that service with updates on their individual case; in that instance our emails will always bear our company logo, telephone number and the name of the consultant who is dealing with your case.

Need help with completing your 2013/14 tax return? TaxRefundPro offers a competitive tax return service! Put your mind at rest and call one of our experienced consultants for a free confidential assessment of your case on 0203 137 5773.

Funny!! Top 10 Terrible Excuses For Missing The Self Assessment Deadline

excuses to missed tax return deadline lol

This week HMRC revealed some of the most terrible excuses from hapless tax payers for missing the 31 January tax return deadline. You guessed it, “it wasn’t my fault” is the common theme in these pitiful attempts to justification, ranging from naivety to downright delusion. Unsurprisingly, none of these lame excuses cut it with Mr Taxman and £100 penalties were duly dished out to their (sometimes) imaginative but tardy authors.

Funny!! 10 Most Terrible Excuses For Missing The Self Assessment Deadline

Have a chuckle looking at this list and tell us which excuse you found was funniest (mine is number 4!)…

  • My pet dog ate my tax return…and all the reminders.
  • I was up a mountain in Wales, and couldn’t find a post box or get an internet signal.
  • I fell in with the wrong crowd.
  • I’ve been travelling the world, trying to escape from a foreign intelligence agency.
  • Barack Obama is in charge of my finances.
  • I’ve been busy looking after a flock of escaped parrots and some fox cubs.
  • A work colleague borrowed my tax return, to photocopy it, and didn’t give it back.
  • I live in a camper van in a supermarket car park.
  • My girlfriend’s pregnant.
  • I was in Australia.
  • Around 11.2 million people are expected to fill out a tax return for the 2013/14 tax year. If this is your case and you still haven’t submitted yours, now is the time to do it if you want to avoid penalties… Because the 31 October deadline for submitting paper tax returns has passed, all 2013/14 must now be submitted online. If you still haven’t registered to use HMRC’s online services, you must do it without delay as it will take another 10 days to be issued an activation code through the post.

    Need help with completing your 2013/14 tax return? TaxRefundPro can help! Call one of our experienced consultants for a free confidential assessment of your case on 0203 137 5773.

    Self Assessment Tax Returns - Act Now To Avoid Penalties From HMRC

    Self Assessment Tax Returns - Act Now To Avoid Penalties From HMRC

    It’s this time of the year again… Time to complete your 2013/14 self assessment tax return if you haven’t already done so. If you have been requested from HMRC to complete a tax return, do this without delay to avoid financial penalties. The deadline for online submission of your 2013/14 is 31 January 2015. The deadline for paying any tax owed for 2013/14 is also 31 January 2015, so don’t leave it to the last minute as the actual completion of the tax return may involve some time-consuming work, like totalling your invoices and receipts for that year.

    Self Assessment Tax Returns - Act Now To Avoid Penalties From HMRC

    Missing the 31 January deadline could prove costly:

    • an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time;
    • after three months, additional daily penalties of £10 per day, up to a maximum of £900;
    • after six months, a further penalty of five per cent of the tax due or £300, whichever is greater; and
    • after 12 months, another five per cent or £300 charge, whichever is greater.

    There are also additional penalties for paying late of five per cent of the tax unpaid at 30 days, six months and 12 months.

    Another benefit of using the online filing system is that you can opt to receive future communications from HMRC electronically rather than by post.

    Need expert help with completing your tax return? TaxRefundPro offer competitive tax return services to the self employed. If you are a member of the CIS scheme, take advantage of our January offer and save pounds! Contact one of our specialists without delay on 0203 137 5773 for a confidential, no-obligation quote.

    Handyman Never Paid Taxes In 20 Years… 3 Years In Prison!

    Handyman Never Paid Taxes In 20 Years… 3 Years In Prison!

    Unbelievable! HMRC’s press office named and shamed a Norfolk handyman who was sentenced today to 3 years in prison for not declaring his self employed income during a career spanning over 20 years. HMRC estimated that Richard Green, who never registered as self employed or paid any tax or National Insurance, cheated the public coffers off nearly £170,000.

    Handyman Never Paid Taxes In 20 Years… 3 Years In Prison!

    How the fraudster was uncovered is interesting, too. HMRC officers found out that Green worked as a self employed handyman but could not trace any tax returns since 1992. While being investigated, the 63-year old admitted that he was self employed and was earning between £15,000 and £25,000 a year. Numbers didn’t stack up when HMRC checked his bank account and realised that he’d been earning almost £70,000 in 2007/08.

    Now, I am not a die-hard fan or a passionate advocate of HMRC (or the government in general), but in this instance I feel like applauding the officers whose investigation helped put this cheat behind bars. Evading tax is not a faceless crime. It is an insult to everyone who pays taxes, honestly and on time. It deprives the country from funding schemes for the under-privileged and puts an extra burden onto the rest of us when tax hikes are deemed necessary to meet public expenditure. Evading tax defrauds everyone.

    Self employed individuals (who in their overwhelming majority are honest and diligent) do have a great advantage over the employed population when it comes to tax. Being self employed allows you to offset legitimate business expenses against your tax bill while having a whole host of tax breaks available to you, depending on your particular occupation or field of activity. This means self employed people can actually significantly reduce their tax bill, a privilege that most employed people do not enjoy… they pay income tax through their employment, based on their gross salary, and that’s it! So the least HMRC – and the public – should expect from self employed individuals is that they fulfil their responsibility and declare their income in the first place.

    Surely, someone like Richard Green could have avoided the long arm of the law if he had played by the rules, like (nearly) everyone else… There are plenty of accountancy firms and tax professionals (like TaxRefundPro) who can help dutiful tax payers comply with the tax system. I am sure that if he had bothered to enlist such help back in 1992, Mr Green would have found it… handy!

    TaxRefundPro offer competitive tax return services to the self employed. Should you need help with filling in a tax return, contact one of our specialists on 0203 137 5773 for a confidential, no-obligation quote.

    HMRC Urge Self Assessment Newcomers To Register Online Now

    HMRC Urge Self Assessment Newcomers To Register Online Now

    HMRC last week reminded tax payers who still haven’t registered to use electronic filing for their 2013-2014 tax return to do it without delay.This is because the online registration process can take up to seven days to complete. You don’t want to be caught in the last-minute rush to beat the 31 January deadline for online submission and payment of the tax you owe. If you miss that deadline, you will start incurring financial penalties so it’s important to register now.

    HMRC Urge Self Assessment Newcomers To Register Online Now

    The first thing to do if you are new to Self Assessment online and haven’t previously registered is to visit the official website and follow the instructions:

    HMRC will then send you an activation code by post. If you have moved house and didn’t tell HMRC, you must make sure you communicate your new address to them, otherwise the activation code will be sent to your last known address.

    Once you receive the activation code, simply input it into your newly created online account to complete the registration process… and that’s it, you are ready to use the online filing system!

    Another benefit of using the online filing system is that you can opt to receive future communications from HMRC electronically rather than by post.

    TaxRefundPro offer a tax return service to the self employed. Should you need help with filling in a tax return, contact one of our specialists on 0203 137 5773 for a no-obligation quote.

    Mechanics – Fast Guide To Claiming Tax Relief For Your Tools

    Mechanics - Fast Guide To Claiming Tax Relief

    This guide is designed to help employed mechanics who purchase their own work tools… Call it a "tool tax rebate", a "mechanic’s tax rebate" or a "tool tax rebate", it means pretty much the same – trying to claim back some money for the tools you purchased. While you may already be familiar with this process to a degree, here's some helpful Q&A to provide you with a better understanding of HMRC’s guidelines so you can avoid common pitfalls and disappointments…

    Mechanics – Fast Guide To Claiming Tax Relief For Your Tools…

    We are not talking about self employed mechanics as the rules applicable to their status them come under the Self Assessment tax system, which is markedly different to the Pay As You Earn (PAYE) tax system reserved for employed staff. This guide is designed to help employed mechanics who purchase their own work tools…

    What is tax relief?

    According to, tax relief is defined as an “amount that can be deducted from a person’s annual income in order to reduce the amount on which tax is paid”. For example, tool purchases worth £1,000 in a given tax year could be deducted from your taxable income of, say, £20,000 per annum, to reduce the taxable element to £19,000. But because you would already have paid tax on income worth £20,000 in that tax year (and not £19,000), you would be owed back from HMRC the tax you paid on £1,000. However, don’t misunderstand the facts – If you purchased £1,000 worth of tools in a particular tax year, this doesn’t mean you will be getting a tax rebate worth £1,000! Tax rebate is different from tax relief. Carrying on with the example, the tax relief is based on the purchase value of £1,000. The tax you would have paid on £1,000 depends on the income tax rate applicable to you. So, if you’re a 20% tax payer, you would be owed back a tax rebate of £200 from the taxman (£1,000 x 20%), not £1,000!

    Can I get tax relief if I don’t pay tax?

    If you are in arrears with HMRC (i.e. You owed them money from previous tax years), you can still claim tax relief but the amount of tax refund due to you will be used by HMRC to repay your debt. HMRC will only repay you a physical tax refund once your arrears have been repaid in their entirety.

    Are tax rebates from HMRC capped?

    Yes. You cannot get a tax rebate that is superior in value to the amount of tax you paid. A tax rebate is simply the repayment of overpaid tax.

    How far back can I claim tax relief for my tools?

    You can claim back tax relief for the tools & light equipment you purchased in the last 4 tax years (not 6, as used to be the case!). From the date of this article, this means you can claim back tax for purchases from 6th April 2010, not before. This also implies that if you wait too long to claim tax relief you could lose your entitlement for the earliest years, so don’t delay!

    Can I claim tax relief for purchases I made this year?

    Not straight away. If you want to claim back money for your tools on purchases incurred during this current tax year, you’ll have to wait until the current tax year has ended, which is from 6th April 2015. This is because you can only submit a tool tax rebate claim for past (or lapsed) tax years.

    For which purchases can I claim tax relief?

    Not straight away. If you want to claim back money for your tools on purchases incurred during this current tax year, you’ll have to wait until the current tax year has ended, which is from 6th April 2015. This is because you can only submit a tool tax rebate claim for past (or lapsed) tax years.

    My boss did reimburse me for some of my tools, can I still claim tax relief?

    For your claim to be valid, you must have incurred the expenses yourself and not been reimbursed by your employer. Eliminate from your claim any purchases already refunded by your employer. If you don’t, it’s fraud.

    Do I need to provide receipts to HMRC?

    Amazingly, no, BUT.... As long as the actual purchase is traceable, you should be fine. It is unlikely that HMRC would request proof of purchase but it’s always best to keep all receipts in case they do (this could happen long after a claim had been settled). Ask from your tool supplier to print off a purchase history for the years you wish to claim tax relief.

    How do I calculate my expenses?

    Here’s a rough step-by-step guide, assuming your tax position with HMRC is standard (no debt owed to them; you paid the correct of income tax in each previous tax years)…

    Step 1 - First, gather all your list of purchases from your supplier(s), including receipts from shops or eBay related to your tools. Automotive tool suppliers / manufacturers like Snap-on, Mac Tools, Draper, etc… should provide you with a purchase history if you ask your rep.

    Step 2 - Tot up your expenses per tax year, working from 6th April until the 5th of April of the following year, and so on. Always count the total purchase price (including VAT). If you have a monthly payment plan in place with your tool supplier, only count the purchases that you already paid for.

    Step 3 – Once you arrive to the total figure of purchases per tax year, multiply that figure by 20% if you’re a 20% tax payer (most employed mechanics are). For instance, say you purchased tools worth £2,000 in that tax year: £2,000 x 20% = £400. That’s the amount of money you should expect back from HMRC.

    Can I apply for tax relief directly with HMRC?

    Absolutely. You can do all the paperwork yourself (HMRC will only accept claims by post, not telephone or email). For expenses values under £2,500 per tax year, use a P87 form “Tax relief for expenses of employment”. You can download the form for free from HMRC’s website. Complete one P87 form per tax year and then return it to HMRC. The form includes a guide on how you should complete it. If the expense value for your tools is £2,500 or over in a particular tax year, you will need to use a self assessment tax return to claim tax relief. Tax return forms and guides are also freely available from HMRC’s website. A word of caution, though… If you’re not familiar with the tax system, tax returns or not so good with forms or calculations, the process may prove quite frustrating, as well as time-consuming. For that reason, many mechanics opt for using the paid services of a tax refund company or a tax agent. Another significant advantage is that tax agents are familiar with the HMRC’s rules and processes so they should ensure that your claim is submitted within the rules, legally and legitimately (mistakes with HMRC can prove costly in the long run!).

    How can I select a reputable tax agent or a tax refund company?

    Unbiased answer – Shop around as best you can before you commit to anyone! An online search is a good place to start. Don’t focus solely on the rates advertised. First look for a company that is well-established and reputable. Avoid firms that will want to charge you any money up front. The way most tax agents get paid nowadays is from deducting their fee directly from your refund, so you’re never physically out of pocket. Most will also offer a “no refund, no fee” guarantee. Stay away from firms making fanciful statements – If what they say sounds too good to be true, then it probably is…

    In terms of rates, they do vary a great deal from one firm to the next. Some will charge up to 50% of the value of any tax rebate due to you, so shop clever! If a firm’s rates and charges are unclear, question them. If the answer is fuzzy, move on!

    You can see our own rates for expenses tax rebates here.

    Fast Guide To Claiming Tax Relief For Your Work Fuel Expenses…

    Claim Back Petrol Expenses

    A direct effect of the economic recession is that many companies now try to curtail their own operational expenditure even further. This has unfortunately led to an increased number of employed staff having to carry the cost of their business fuel expenses, with little or no contribution from their employer. Most hit professions include carers; IT experts; sales supervisors - to name a few. A fact that HMRC knows only too well, which is why a fundamental understanding of their guidelines could benefit you if you need to claim back tax relief for your legitimate business motoring & fuel expenses.

    Fast Guide To Claiming Tax Relief For Your Work Fuel Expenses…

    We are not talking about self employed workers, who come under an altogether separate tax system - Self Assessment. This guide explores tax relief for employed workers, under the PAYE ('Pay As You Earn') tax system. PAYE is a lot more restrictive when it comes to claiming tax relief for work expenses.

    Tip #1- First check if your particular situation meets the criteria from HMRC to see if you have a valid reason for claiming tax relief for your business fuel expenses:

    • The expense in question must be associated with business activities only. Commuting to and from a permanent place of work is not tax deductible. So, if you use your car to get to and from work - be it a shop, an office, a factory or any regular place of work - you simply cannot claim tax relief for motoring expenses incurred while commuting to and from work!
    • The business expense must be essential for you to carry out the duties and responsibilities of your profession or occupation. In some cases, HMRC could ask you to supply a copy of your contract of employment as proof. For example, they would like to see that in the normal course of your job you do have to use your own vehicle.
    • >Your employer did not reimburse you at all - or only partially - for the expense in question. In most cases, HMRC will be satisfied with your claim if it is supported by a simple signed declaration from your employer. In you do obtain some reimbursement from your employer but it is under the allowance threshold of 45p per mile for the first 10,000 miles per tax year (25p per mile thereafter), you may still be able to claim back the difference as tax relief. We'll come back to that point in a little bit...
    • You must have paid for your business expenses yourselfand they can be tracedfrom receipts or bank statements. HMRC will not normally require them as evidence, but in case they do, best be on the safe side! It is worth remembering that HMRC may investigate a particular case long after a claim for tax relief has been settled - even several years afterwards.
    • Your claim for tax relief must be in relation to the last four lapsed (or past) tax years, not the tax year you're in! The earliest date you can go back to claim tax relief for your work fuel expenses is 6th April 2010; any claims for earlier years will automatically be rejected by HMRC.
    • If you wish to claim tax relief for this currenttax year (2014-15), you must wait until the end of the tax year, which is 5th April 2015...

    Tip #2- The amount of tax relief you can get for a particular tax year cannot exceed the amount of income tax you actually paid in that tax year. Let’s say you paid £1,000 in income tax last year and you are trying to claim back £2,000 in tax relief for the same tax year, you’ll only get £1,000 back from the taxman. Also, if you didn’t pay any income tax, you won’t get any tax back at all as there wouldn’t be any tax to apply relief to in the first place!

    Tip #3- If you are in arrears with HMRC (i.e. You owed them money from previous tax years), you can still claim tax relief but the amount of tax refund due to you will be used by HMRC to repay your debt. HMRC will only repay you a physical tax refund once your arrears have been repaid in their entirety.

    Tip #4- Use a detailed mileage log, this is the simplest method to claim tax back on your business motoring expenses. Break it down per tax year. From then you can apply the relevant mileage allowance rate and calculate the amount of tax you could get back! A detailed mileage log should include:

    • The exact starting address and destination address of each business travel
    • The actual reason for travel (avoid being lazy by just writing 'Business', be precise i.e. 'Sales meeting with Client X')
    • The accurate round trip mileage foreach particular business travel

    Tip #5- Calculate your tax relief entitlement. From the 2011-12 onwards, the mileage allowance is set at 45p per mile for the first 10,000 miles, and 25p per mile for each additional mile. As previously mentioned, this rate is applicable per tax year so make sure you have broken down your mileage per tax year. Once you've done this, simply take the number of business miles you've travelled per tax year and multiply it by 45p for the first 10,000 miles. Add to this figure any mileage above 10,000, multiplied by 25p. Finally, to arrive to the actual tax relief, multiply your result by either 20% or 40%, depending on how much income tax you paid in that tax year.

    Example 1 - You worked out from your mileage log that your business mileage for the last tax year is 12,000 and your employer did not contribute towards it or refund you in any way. First step, take 10,000, multiply it by 45p = £4,500. Step 2, for the remaining 2,000 miles, time it by 25p = £500. Step 3, add both figures together - £4,500 + £500 = £5,000 for the business miles you travelled last year. Step 4, apply the rate of income tax you paid that year; if you paid 20% income tax, your tax relief entitlement is therefore £5,000 x 20% = £1,000; if you paid 40% income tax, then the tax relief figure applicable would be £5,000 x 40% = £2,000. Not too difficult, is it…?

    Example 2 - Your employer reimbursed some of your business fuel expenses, let’s say, at 20p per mile (you should easily be able to find out from your pay slips the actual rate used by your employer). Using Example 1, your employer would have therefore already contributed 12,000 miles x 20p = £2,400 towards your business mileage. If the total value of your fuel business expenses for that year was £5,000 (we worked that out earlier), simply subtract £2,400 from it… £5,000 minus £2,400 = £2,600. This is the shortfall you could claim back as tax relief. If you paid income tax at 20% rate, then your actual tax relief entitlement would be £2,600 x 20% = £520. This is the value of the actual tax relief that you should expect back from the taxman. Not an amount to be sniffed at, wouldn’t you say…?

    Tip #6- If the value of your expenses per tax year (not the tax relief entitlement) is less than £2,500, fill in a P87 form for each tax year and return it to HMRC. P87 forms are downloadable from HMRC's website for free, along with the guide on how to complete them.

    Tip #7- If the value of your expenses per tax year is worth £2,500 or over, don’t use a P87 form or your claim for tax relief will be rejected. For business expenses worth £2,500 or over, you will need to complete a self assessment tax return for each year you wish to claim back tax relief.

    Tip #8- Working out tax relief for your work expenses and submitting your claim to HMRC in the required format can be tricky, especially if you are unfamiliar with completing tax returns or P87 forms. It is advisable to enlist the services of a reputable specialist tax agent to ensure your claim is properly submitted to HMRC. Tax agents know all the processes and forms involved, as well as being a good source of advice. Look for a company that is able to give you a free assessment so you can get confirmation that you have a valid claim in the first place. Before you commit to anything, shop around for the best rates available as these tend to vary greatly from one company to the next. Last but not least, check their credentials to ensure that they are a genuine and reputable company specialising in that field…

    Need specialist help to claim tax relief for work fuel expenses? TaxRefundPro provide a free no-obligation assessment. Contact one of our friendly consultants for a confidential chat on 0203 137 5773.

    EU Temporary Migrant Workers To Lose Their Tax-Free Personal Allowance Entitlement

    EU Migrant Chambermaids

    On August 12, Chancellor George Osborne revealed tough new measures aimed at curbing down the influx of seasonal workers from EU countries. Up to a quarter of a million people, who live and work in the UK for less than six months of the year, should lose their entitlement to personal allowance, currently worth £10,000 a year.

    EU Temporary Migrant Workers To Lose Their Tax-Free Personal Allowance Entitlement

    Up to now, most temporary workers from the EU (including many labourers, agricultural workers, cleaners, catering and hospitality staff) could reclaim the tax they paid in the UK once they returned to their own country. Not anymore, as the proposed changes mean that they will now be set to pay 20% income tax on every pound they earn in Britain – in effect paying more tax than their UK counterparts. The wanted effect is to discourage seasonal migrant workers flooding the UK job market while being tax exempt, which is seen by many as an injustice to British workers who have to pay income tax all year round.

    Under a raft of proposals from the Treasury, other affected groups to be stripped off their personal allowance concern British expats receiving income from rental properties they own in the UK and those receiving government pensions (please read my previous blog for more details).

    While many observers and commentators applauded these measures, deemed to act both as a deterrent to EU immigration and a fair move towards British taxpayers, their enthusiasm strikes me as a little bit short-sighted. One thing Mr Osborne might not have fully weighed up is the potential repercussions his proposals will have on very specific UK sectors very dependent on EU migrant manpower, like the hospitality and fruit-picking industries, to name a few.

    Next time the same anti-immigration pundits stay in a hotel within these shores, I wonder if they‘ll muster the courage to look in the eye of the person who serves them breakfast or cleans their room. Few Brits tend to occupy the position of bottom-rung housekeepers in hotels, actually. Seasonal foreign workers from the EU with limited grasp of English – many from Eastern Europe – make up the bulk of many British hotel staff, including most respected chains and top-notch private establishments. I wonder why that is… Is it maybe because temporary EU migrants, unlike their British counterparts, accept to work long unsociable hours and perform back-breaking chores for staggeringly low pay without complaining (or the means to complain, even)…? Or is it maybe because most Britons themselves would not sign up for the same harsh working conditions so HR departments have to resort to sourcing out staff from the migrant population and who prove easier to pick and drop at short notice? Could it also be a little-publicised (and scandalous) case of social exploitation nurtured by opportunistic businesses only too happy to profit from the cheapest labour source available…?

    God help us if these measures succeed in halting temporary EU immigration to the UK. Would that mean even higher prices for hotel rooms and fruit shopping due to staff shortages or the increased cost of hiring – or poorer service…?

    TaxRefundPro specialise in PAYE tax rebates for foreign and British tax payers. If you think you might be entitled to a tax rebate, call one of our experts on 0203 137 5773 for a free confidential and no-obligation assessment.

    Government Plans To Slash Expats’ Personal Allowance

    Confused Expats Tax Allowance

    An estimated 175,000 Britons who live abroad and draw rental income from property they own in the UK could see their £10,000 personal allowance slashed under new proposals from George Osborne, the Chancellor of the Exchequer. The curtailment of personal allowance will also affect retirees who draw a UK pension and who live overseas. In total, the move is said to be affecting up to 400,000 people and earn the Exchequer an extra £400 million a year.

    Government Plans To Slash Expats’ Personal Allowance

    The Treasury’s new proposals, now released for consultation, are thought to be included in the 2015 budget for possible implementation in 2016.

    In financial terms, this would mean that based on the minimum 20% rate of income tax, expat couples could be £4,000 worse off in the year (£2,000 each).

    Back in March, the Chancellor had already warned of his intention to cut the rate of personal allowance for expats. The reasoning is simple – the UK personal allowance is at an all time high, worth £10,000 a year per person, and is becoming increasingly difficult for the Treasury to sustain; the plan is therefore for the UK to get in line with the less generous tax regimes of many other leading countries like the US, Canada and much of the EU member states.

    A Treasury spokesperson explained the motivation behind these proposals: 'The increases the government has made to the personal allowance supports hardworking people by helping them to keep more of the money they earn and is one of the most generous in the world. At the same time, we believe that it is reasonable to consider whether non-residents who receive income from the UK are paying a fair share of tax on that income in this country. The government is seeking views on whether it would be appropriate to restrict the personal allowance to those resident in the UK, or people who have most of their economic connections in the UK, as is the case in many other countries including most of the EU.'

    It is unlikely that many of the 1.2 million expat retirees would end up paying more tax overall, either because their pension is already taxed in their country of residence or because they are UK residents for tax purposes (by spending half the year in Britain). However, expats drawing a government pension (like former civil servants and NHS workers) might well be feeling the financial squeeze as government pensions are only taxable in Britain.

    Although the personal allowance should remain available only to those with a “strong economic connection” to Britain, some tax experts are warning that many expats would be forced to consider severing their economic ties with Britain altogether and look for alternative property investment opportunities and pension schemes overseas, as there won’t be any real tax benefit to keep their assets locked in the UK.

    One thing is for certain, expats receiving rental income in the UK should expect to pay more tax in future. One way to counteract the effects of the cut in personal allowance is to offset all possible allowable expenditure in order to minimise one’s tax liability; another is to look at double taxation treaties to prevent being taxed twice – both in the UK and overseas.

    Now more than ever, expats need to seek expert financial help when completing tax returns.

    TaxRefundPro specialise in tax return services to expats and UK landlords living overseas. Call 0203 137 5773 for a free confidential chat with one of our experts.

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