Weekly tax brief 21 September 2016

VAT changes could create jobs, boost family finances and help the environment

21 September 2016

The Swedish government has recently announced it will cut the rate of VAT on repairs from 25 per cent to 12 per cent in an effort to encourage citizens to throw away fewer household items and to have more repaired. With Brexit just around the corner, it seems to us that this could work particularly well for the UK economy too.

Unauthorised pensions withdrawals – does the punishment fit the crime?

21 September 2016

It is easy to think that after all of the recent legislative changes anybody can get hold of their pensions pot at any time without tax consequences. However, unauthorised payments out of pension schemes can, and do, attract substantial tax charges. Two recent contrasting cases illustrate the point, but also raise questions as to whether the punishment always fits the crime.

Lifetime ISA is welcome, but could go further

21 September 2016

There was some uncertainty whether the Lifetime ISA, announced by the former Chancellor, George Osborne, would go ahead as planned. However, HMRC has now updated its technical note and confirmed that the new account will be available from April 2017. Savers looking for a tax efficient arrangement will therefore have an option of pension schemes, which are now more flexible than ever before, regular ISAs and Lifetime ISAs and will need to carefully weigh up the benefits of each.

Harmful tax practice?

21 September 2016

Last week HMRC and the Office of National Statistics released statistics on the uptake of Patent Box, a tax relief designed to encourage companies to locate high-value jobs, associated with the development, manufacture and exploitation of patents, in the UK. Despite the fact that this was one of the tax breaks singled out by the EU as being a potentially harmful tax practice, the new numbers appear to show the policy has worked as intended.

Will the latest HMRC nudge initiative help plug the tax gap

21 September 2016

In an effort to maximise recoveries, HMRC is carrying out a trial to find out if sending text message alerts to taxpayers will increase the chances of them paying their taxes on time. So will this help plug the £34bn tax gap?