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Larking Gowen weekly digest – latest news on direct/indirect tax, financial reporting and more…

Direct taxes

1. Capital gains tax (CGT) on foreign currency assets: A reminder that gains or losses on foreign currency assets must always be calculated by translating the disposal proceeds at the exchange rate on the date of disposal and translating the acquisition costs at the exchange rate on the date of acquisition. It is not enough to work out the foreign currency gain and translate at just one exchange rate. This has been reconfirmed in the recent Tribunal case Knight v HMRC.

2. 2015/16 pensions annual allowance: The 15/16 pensions annual allowance is £80,000 for the pre-alignment period between 6 April 2015 and 8 July 2015, and nil (but with £40,000 carried forward from the pre-alignment period) for the post-alignment period between 9 July 2015 and 5 April 2016. This is NOT the same as up to £80,000 for the 2015/16 tax year and the timing of contributions can be very important.

3. Self Assessment – Voice ID: Starting this month, some customers calling the tax credits and self-assessment helplines will be able to enrol for voice identification (Voice ID), a move which will speed up the security steps customers are asked when calling HMRC.

VAT and indirect taxes

1. Flat Rate Scheme: The rules relating to the scheme are changing. Proposed legislation introduces a new rate of 16.5% for 'low cost traders' – those who spend less than £2,000 per annum on GOODS related to the business (typically service based industries). We urge any potentially affected traders to contact a member of Larking Gowen's VAT team.

Other

1. Inflation: RPI annual inflation in December was 2.5% (up from 2.2% in November). The government's preferred measure, CPI annual inflation rose to 1.6% (up from 1.2% in November). The main contributors to the increase in the rate were rises in air fares and the price of food, which were partially offset by a lower than expected fall in the price of motor fuels. CPIH, the new measure of consumer price inflation is 1.7% in the year to December 2016 (up from 1.4% in November). The RPIJ in December was 244.0 (up from 242.7 in November).

Whilst every effort is made to ensure accuracy, information contained in this publication may not be comprehensive and recipients should not act solely on the basis of this information.