If your income is expected to exceed £100,000 for the first time, we would like to remind you of the effects this can have on your personal allowance and marginal tax rate.

If you earn over £100,000 in any tax year, your personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This means that any taxable receipt that takes your income over £100,000 will result in a reduction in personal tax allowances. Your adjusted net income is your total taxable income before any personal allowances, less certain tax reliefs such as trading losses and certain charitable donations and pension contributions.

For the current tax year if your adjusted net income is likely to fall between £100,000 and £125,000 you would pay an effective marginal rate of tax of 60%. This is because your £12,500 tax-free personal allowance is gradually withdrawn (see previous paragraph). If your income sits within this band you should consider what financial and tax planning opportunities are available to avoid this outcome.

For example, you could increase charitable donations, pension contributions or consider participating in certain tax effective investment schemes.

Tax planning tip

A higher rate or additional rate taxpayer who wanted to reduce their tax bill last year, 2018-19, could make a gift to charity in the current tax year, 2019-20, and elect to carry back the contribution to 2018-19. A request to carry back the donation must be made before or at the same time as the 2018-19 Self-Assessment return is completed and filed.

The High Income Child Benefit tax charge could apply to you or your partner if either of your individual taxable earnings exceeds £50,000 and you are in receipt of child benefit. The charge effectively claws back the financial benefit of receiving child benefit either by reducing or removing the benefit entirely.

If you or your partner are likely to have exceeded the £50,000 threshold for the first time during the last tax year (2018-19), then you must take appropriate action. If both you and your partner have an income that exceeds £50,000, the charge will apply to the partner with the highest income.

If you continue to receive child benefit (and earn over the relevant limits) you must pay any tax owed for 2018-19 on or before 31 January 2020. The child benefit charge is levied at the rate of 1% of the full child benefit award for each £100 of income between £50,000 and £60,000. If you or your partner's income exceeds £60,000, the amount of the charge will equal the amount of child benefit received.

Planning note

If the High Income Child Benefit charge applies, it is usually still beneficial to claim Child Benefit for your child as it can help to protect your State Pension and will make sure your child receives a National Insurance number. However, you have the choice – to keep receiving child benefit and pay the tax charge or elect to stop receiving child benefit and not pay the charge.

The shared parental leave and pay rules offer working parents’ far greater choice as to how they share the care of their child and take time off work during the first year of their child’s life. The rules apply equally for children that have been adopted. There are various work and pay criteria that must be met in order to be eligible and the parents must share responsibility for the child. For example, in cases where only one parent in a couple is eligible, the leave cannot be shared.

Under the rules, mothers must take at least two compulsory weeks (four weeks if working in a factory) of maternity leave immediately after birth, but after that working couples can share up to 50 weeks of shared parental leave and up to 37 weeks of statutory shared parental pay. These rules, which were introduced in 2015, give families greater choice over how they arrange childcare in the first year of their child’s life by allowing working mothers the option to end their maternity pay and leave early and to share leave and pay with their partner.

New parents can choose to be at home together or to work at different times and share the care of their child during the important first year after birth. This means that parents can take their leave simultaneously or they could opt to take leave in phases. For example, 20 weeks for the mother/adopter, followed by 20 weeks for the father/partner, followed by 10 weeks for the mother/adopter. Statutory shared parental pay is currently paid at the rate of £148.68 a week or 90% of an employee’s average weekly earnings, whichever is lower.

1 December 2019 – Due date for Corporation Tax payable for the year ended 28 February 2019.

19 December 2019 – PAYE and NIC deductions due for month ended 5 December 2019. (If you pay your tax electronically the due date is 22 December 2019)

19 December 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2019. 

19 December 2019 – CIS tax deducted for the month ended 5 December 2019 is payable by today.

30 December 2019 – Deadline for filing 2018-19 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2020-21.

1 January 2020 – Due date for Corporation Tax due for the year ended 31 March 2019.

19 January 2020 – PAYE and NIC deductions due for month ended 5 January 2020. (If you pay your tax electronically the due date is 22 January 2020)

19 January 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2020. 

19 January 2020 – CIS tax deducted for the month ended 5 January 2020 is payable by today.

31 January 2020 – Last day to file 2018-19 self-assessment tax returns online.

31 January 2020 – Balance of self-assessment tax owing for 2018-19 due to be settled on or before today. Also due is any first payment on account for 2019-20.

VAT retail schemes are a special set of schemes used by retail businesses to account for VAT.  The schemes are usually used by businesses that sell a significant amount of low value and/or small quantity items to the public with different VAT liabilities.

The use of the scheme can save businesses a significant amount of time in calculating the amount of VAT due to HMRC on each and every sale. In many circumstances it would be extremely difficult for these businesses to account for VAT using standard VAT accounting. By using the VAT retail scheme, retailers are able to calculate VAT due to HMRC at the standard, reduced and zero rates of VAT as a proportion of sales. Usually this is done on a day by day basis.

There are 3 standard VAT retail schemes:

• Point of Sale Scheme
• 2 x Apportionment Schemes
• 2 x Direct Calculation Schemes

There is also the option of using a bespoke scheme. The use of a bespoke scheme is obligatory for retailers with a turnover excluding VAT of £130 million or more. The decision as to which retail scheme to be used is usually driven by a combination of looking at the scheme that provides the best result for the business and the cost of using the scheme. Note, HMRC need to be of the opinion that the chosen scheme is fair and reasonable.