Non-residents have restrictions on the number of days (in fact midnights) that they may enter the UK based on their personal circumstances. COVID-19 may have seen unplanned returns to the UK or individuals not able to leave the UK, thus leading to an increase an individual’s UK day count. The Statutory resident test does have a relief where days spent in the UK for exceptional circumstances (up to the maximum of 60 days per tax year), are not counted. Following the outbreak of COVID-19, HMRC have recently updated their guidance manual to confirm that the following circumstances will be regarded as ‘exceptional circumstances’ for days spent in the UK;

1. you are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus,
2. where official Government advice is not to travel from the UK as a result of the virus,
3. you are unable to leave the UK as a result of the closure of international borders, or
4. you are asked by your employer to return to the UK temporarily as a result of the virus

There will be many individuals who returned to the UK, not at the clear request of their employer, knowing the limitations that COVID-19 would put on them leaving the UK. The original guidance provided by HMRC in respect of exceptional circumstances was always to assist those who were unable to leave the UK, not those that chose to return, and it would appear that HMRC have not altered their stance on this.

In light of the current global situation due COVID-19, both the Treasury Department and IRS have announced an extension to the April 15th deadline for Federal Income tax filing, and payment of taxes due.

This new change allows for both the filing of a Federal Tax Return and payment of any taxes owed to be deferred from the standard filing deadline of April 15th, to July 15th. This change also provides relief from any interest and/or penalties, that the IRS would otherwise have assessed.

The extension applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers, as well as those who pay self-employment tax.

In order to qualify for this automatic federal tax filing and payment relief, there is no requirement from the taxpayer to file any additional forms and calls to the IRS are not necessary either.

The IRS urges that if any tax filings that reflect a refund position for the taxpayer, these filings are made as soon as possible to reduce any delay from receiving the actual refund itself. Currently, the IRS have advised that most tax refunds are still being issued within 21 days.

To summarise:

• As of now, no income tax returns are due on April 15, 2020. The due date for income tax returns is July 15. The July 15, 2020 due date can be extended to October 15, 2020

• Any payments otherwise due on April 15, 2020 are not due until July 15, 2020

• Second quarter estimated income tax payments due on June 15, 2020, as of now, are still due on June 15, 2020

• Currently, this relief only applies to federal income returns and tax (including tax on self-employment income) payments which are due on April 15, 2020. State filing and payment deadlines vary and are not always the same as the federal filing deadline. On this basis, it will be prudent to check the State Tax Agencies themselves for specific details on this, and the following link may help:

Click here

Overseas based buyers of residential property in England and Northern Ireland will be forced to pay a 2% stamp duty surcharge beginning April 2012. Additionally, it is worth noting that for overseas buyers who are not intending to move to the UK and live in the property themselves, there will be an additional 3% levy on top, bringing the total surcharge to 5%.

As part of this years budget, the chancellor unveiled plans to increase the tapered annual allowance threshold by £90,000. The tapered allowance, initially introduced from 6th April 2016 saw the annual allowance reduce from £40,000 to £10,000 for those with income levels of £110,000 (reaching threshold level), and £150,000 to £210,000 (reaching adjusted annual income level).

From April 2020, both the threshold and adjusted incomes will rise by £90,000 to £200,000 and £240,000, respectively. For individuals with total incomes of more than £300,000, the annual allowance will gradually fall from £10,000 to only £4,000, and so in short, the contribution will be limited to £4,000 for those earning in excess of £312,000.

A welcome change which means that heirs will pay less tax on homes inherited from direct relatives from April 6th. Currently inheritance tax is set at 40%, but individuals will be able to pass on £175,000 worth of property tax fee – up from £150,000 in 2019-20.

The first £325,000 of an individual’s estate is already tax-free, and the £175,000 threshold for homes left to descendants is in addition to this. This takes the inheritance tax thresholds for individuals’ estates in 2020-21 to a maximum of £500,000. However, married couples and those in civil partnerships can pool their individual allowances, taking the total exemption to £1,000,000 in 2020-21.

This relief is tapered for individuals who pass on properties worth more than £2M.

In the Chancellors debut budget which was delivered on March 11th, he advised of a change regarding claiming Entrepreneurs Relief. The change, seen as a major shake-up, which limits the tax break available to those selling their businesses. Under the revamp, business sellers will pay 10% tax on lifetime gains of up to £1m, compared with the previous upper limit of £10m.

Above £1m, business owners will be charged standard capital gains tax rates, which is 20% for higher rate taxpayers.

Following the UK’s departure from the EU, Chancellor Rishi Sunak presented the 2020 Budget against a backdrop of economic uncertainty caused by the spread of the coronavirus.

We have put together a PDF which provides an overview of the key announcements arising from the Chancellor’s speech which we trust you will find useful

Budget 2020 summary

The Internal Revenue Service has recently announced new procedures that will enable certain individuals who relinquished their U.S. citizenship to come into compliance with their U.S. tax and filing obligations and receive relief for back taxes.

The new Relief Procedure only applies to individuals who have not filed US tax returns as US citizens or residents, owe a limited amount of delinquent US taxes and have net assets of less than $2 million. Relief can only be obtained by individuals who were non-wilful with their past compliance failures. This is common for taxpayers who have lived outside the US for the majority of their lives and were unaware of their US tax filing obligations.

Individuals that qualify on this basis must file outstanding US tax returns for the five years preceding and their year of expatriation. If the taxpayer’s liability does not exceed a total of $25,000 for the six years, the taxpayer does not have to pay any US taxes. The aim of these procedures is to provide certain former citizens with tax relief. Penalties and interest are not assessed on individuals who qualify for this relief.

The IRS are yet to set a specific termination date and will announce this prior to ending the procedures. Individuals who relinquished their U.S. citizenship any time after March 18, 2010, are eligible so long as they satisfy the other criteria of the procedures.

Estates, trusts, corporations, partnerships and other entities are not entitled to use these procedures as it is only available to individuals.

Relinquishing U.S. citizenship and the tax consequences that follow are serious matters that involve irreversible decisions. Taxpayers who relinquish citizenship without complying with their U.S. tax obligations are subject to the significant tax consequences of the U.S. expatriation tax regime.

Please feel free to contact us should you have any queries regarding the above and we would be delighted to assist you.

The IR35 ‘off-payroll’ rules will be extended to the private sector from April 2020 onwards, directly affecting many contractors and self-employed individuals who carry out consulting work under the umbrella of a one-person limited company.

You may be affected by these rules if you are:

1. a worker who provides their services through their intermediary
2. a client who receives services from a worker through their intermediary
3. an agency providing workers’ services through their intermediary

If the rules apply, tax and National Insurance contributions must be deducted from fees and paid to HMRC directly.

From 6 April 2020:

1. All public sector authorities and medium and large-sized private sector clients will be responsible for deciding if the rules apply.
2. If a worker provides services to a small client in the private sector, the worker’s intermediary will remain responsible for deciding the worker’s employment status and if the rules apply.

If you require assistance with either of these issues or any other matter, please contact your normal adviser at Frontier.

HM Revenue & Customs have collected around £325m and £185M in annual allowance and lifetime charges respectively for the 2017-18 tax year according to Hargreaves Lansdown. Ordinarily, the pension contribution allowance is £40,000 each year tax-free, however, this is reduced to ultimately to £10,000 for those with incomes of £110,000 or more. The lifetime allowance currently is £1.055M

Greater awareness needs to be placed on the contribution that you and your employer both make because pension charges kick in as soon as you are over the threshold and it would be too late to rectify once the tax year has ended. Therefore, we urge you to plan your pension contribution from a tax perspective for the years going forward and ensure you are aware of the relevant contributions ideally at the beginning of the year. Although carrying out a review now would be sensible.

As mentioned, there has also been a spike in the number of people breaching their lifetime allowance. Therefore, individuals with pensions funds which are likely to exceed the lifetime allowance by the time they retire should consider a review of their pension arrangements and contributions.

It may be advisable therefore to review both your pension contributions and value of your pensions to ensure you do not suffer any unexpected pension charges.