HMRC notices

There are special customs requirements for commercial goods or samples which are imported or exported by passengers in their accompanied baggage (hand carried). This is known as Merchandise In Baggage or MIB.

MIB goods include the following:

• goods acquired for company use
• goods for sale
• spare parts
• trade samples

whether or not they are:

• permanently imported/exported
• temporarily imported/exported
• in transit
• liable to customs charges

These goods must be declared electronically to CHIEF or exceptionally a paper C88/ESS form may be completed. If you are taking MIB, you can have your declaration endorsed by Border Force when you leave the EU as proof of export to zero-rated goods for VAT purposes. The process can take some time and HMRC recommends that passengers allow enough time before their flight or voyage to clear the goods at the relevant airport or port.

Any taxpayers that have ceased to be self-employed must advise HMRC of their change in status. There are a number of steps that must be followed if a taxpayer stops trading as a sole trader or if they are ending or leaving a business partnership. This is required so that HMRC can help to get the taxpayers affairs in order.

Taxpayers must send in a Self Assessment return by the relevant deadline and will need to work out their trading income, allowable expenses and any Capital Allowances. Taxpayers must also determine if they have any Capital Gains Tax (CGT) to pay.

They may also be able to claim back any overpaid tax or National Insurance. It is also important to check if there is an entitlement to tax relief by way of entrepreneurs’ relief, overlap relief and / or terminal loss relief. There are also other reliefs available that may reduce the amount of CGT due

Taxpayers that owe tax or National Insurance and have difficulty paying it, may be able to negotiate an agreement with HMRC for more time to pay. In addition, where a VAT registration was in place this will also need to be cancelled and anyone who employed staff will need to close their PAYE scheme and submit final payroll reports.

Students that have finished their studies and entered the workforce, must begin to make loan repayments from the April after they have finished their studies or when their income begins to exceed the annual threshold.

The annual threshold amounts for 2019-20 have been confirmed by the Department of Education. The thresholds will increase to £18,935 (2018-19: £18,330) for plan 1 and to £25,725 (2018-19: £25,000) for plan 2.

The terms of loan repayment for courses of study started before 01 September 2012 are referred to as ‘Plan 1’, and those started after 01 September 2012, are referred to as ‘Plan 2’. Repayments are deducted at a rate of 9% of income over the threshold.

The loans are also subject to varying levels of interest. The interest rates for Plan 2 repayments are based on the Retail Prices Index plus a variable rate dependent on income. The interest rates for Plan 1 repayments are significantly lower than for Plan 2 repayments.

Student Loans are part of the government’s financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying, and it is HMRC’s responsibility to collect repayments where the borrower is working in the UK.

The Student Loans Company (SLC) is directly responsible for collecting the loans of borrowers outside the UK tax system. Maintenance grants are also available under certain circumstances. The grants do not have to be repaid but do reduce the amount of maintenance loan a student is entitled to.

If a taxpayer owns a business as a sole trader or in partnership, a capital gain will be deemed to arise if the business is converted into a company by reference to the market value of the business assets including goodwill. This may give rise to a chargeable gain based broadly on the difference between the market value of the assets and their original cost.

A number of options exist in such situations. One of these involves arranging the incorporation of the business so that it satisfies the conditions necessary to secure incorporation relief. One such condition is that the entire business must be transferred as a going concern in exchange for shares in the new company. It is important to note that where the necessary conditions are met, incorporation relief is given automatically and there is no need to make a claim. The relief works by reducing the base cost of the new assets by a proportion of the gain arising from the disposal of the old assets.

However, there may be certain circumstances where this relief may not always be advantageous, and it is possible to make an election in writing for incorporation relief not to apply. An election must be made before the second anniversary of 31 January next following the tax year in which the transfer took place e.g. an election in respect of a transfer made in 2018-19 must be made by 31 January 2022. The election deadline is reduced by one year if the shares are disposed of in the year following that in which the business was incorporated.