Your tax questions answered by Nick Casson

Nick Casson
Nick Casson

Tax-free childcare accounts - could you tell me more about these tax-free childcare accounts that are replacing the current childcare voucher scheme please?

New tax-free childcare accounts were announced in 2014 to replace the employer-provided childcare voucher scheme. Introduction has been delayed but the new accounts should at last be introduced on a trial basis in early 2017. The new scheme will then be rolled out across the country based on the results of the trial. The rules are complex, but where both parents work and earn at least £115 per week, they will be able to put up to £8,000 a year into a special account which the Government will top up with 20p for every 80p contributed by the parents. This account can only be used to pay for childcare such as nursery fees.

It is anticipated that the new scheme will eventually replace the existing childcare voucher scheme which is only available to employees who work for organisations that offer such schemes. The new system will benefit the self-employed as well as those workers in organisations that currently do not provide childcare vouchers.

What to do when an employee changes address

My employee has moved house. Do I need to inform HMRC, or does she?

It is, and always has been, an individual’s responsibility to notify HMRC of a change of address. If an employee informs you of a change of address, please encourage them to tell HMRC by updating their online Personal Tax Account. If they have not yet used their account they can register in a few minutes at www.gov.uk/personal-tax-account. In some cases, the employee may not be able to do this and you as the employer can pass the information onto HMRC by completing the employee address boxes on your next Full Payment Submission (FPS).

HMRC will automatically update the employee record once three FPS submissions have been received with the updated address and they are all displayed in the same format. If it is not displayed in exactly the same format the address will not be updated. If a change of address is accepted HMRC also update the Personal Tax Account for that employee. Please note, an incorrectly completed address could lead to your employee's mail not being delivered and may affect the payment of some benefits by the Department for Work and Pensions. It could even result in them paying the wrong amount of Income Tax. Hence, it's always preferable if the employee updates

How to pay tax on dividends

I am employed but I have a sideline business that I run with my brother. This year, I think we're going to take dividends of about £12,000 each. How do I go about paying the tax on them?

As you may know, in April 2016, the Dividend Tax Credit was abolished, and a new £5,000 tax-free allowance for dividend income introduced. The allowance does not reduce total income for tax purposes and only applies to dividend income. The new rates of tax on dividend income above the allowance are 7.5% for basic rate customers 32.5% for higher rate customers 38.1% for additional rate customers.

How you pay tax on dividends depends on the amount of dividend income you received in a tax year.

If it was less than £5,000, you should not need to do anything or pay any tax.

If it was between £5,000 and £10,000, you need to tell HMRC. You can do this by contacting the helpline, asking HMRC to change your tax code - the tax will be taken from your wages or pension or put it on your Self Assessment tax return, if you already fill one in.

If the dividend is over £10,000, you will need to fill in a Self Assessment tax return. If you do not usually send a tax return, you need to register by 5th October following the tax year you had the income. You will get a letter telling you what to do next after you have registered.

If you would like any assistance in registering or completing your tax return, your local TaxAssist Accountant would be happy to help. They can also look into your options regarding the settlement of any tax you owe.

Is this HMRC text genuine?

I have already filled my tax return but yesterday, I received a text from HMRC saying I needed to pay my tax. Is it genuine?

You're right to be suspicious- there are a lot of scam emails and text messages out there- particularly claiming to be from HM Revenue & Customs (HMRC). If you have any doubts about the authenticity of a communication, do not give out private information (such as bank details or passwords), reply to text messages, download attachments or click on any links in emails.

Instead, forward suspicious:

· text messages to 60599 (text messages will be charged at your network rate) emails to HMRC’s phishing teamphishing@hmrc.gsi.gov.uk

You should also check HMRC’s guidance on recognising scams if you’re not sure.

Please note, HMRC will never use texts or emails to:

· tell you about a tax rebate or penalty

· ask for personal or payment information

HMRC emails will never provide a link to a secure log-in page or a form asking for information. Instead you’ll be asked to log on to your online account to check for information.

However, you should be aware that HMRC has recently been sending out email and text reminders to taxpayers, advising them to pay their tax before 31st January 2017. The texts and emails do not provide any details though- they are simply a prompt.