The Inland Revenue has published its latest Working Together newsletter from which the following are extracts.
Tax deducted from trading income
There has been some confusion over the use of box 3.98 in the Self Employment page and 4.75A in the Partnership page (3.120 or 4.75A for 1999-2000). Use of these boxes is expected to be very rare; the main use is for tax on patent royalties.
The Inland Revenue has published its latest Working Together newsletter from which the following are extracts.
Tax deducted from trading income
There has been some confusion over the use of box 3.98 in the Self Employment page and 4.75A in the Partnership page (3.120 or 4.75A for 1999-2000). Use of these boxes is expected to be very rare; the main use is for tax on patent royalties.
The electronic lodgement service is the same as filing by Internet in that entries cannot be made in box 3.98. Any entry which may need to be made in these boxes, should be made at box 3.97 or 4.75 (3.92 or 4.75 for 1999-2000) with a note in the additional information box (23.6) on the return, as to what the payment(s) relate.
Pay-as-you-earn tax should not be shown in box 3.98. The notes on self employment, at page SEN10, state that tax deducted under pay-as-you-earn should not normally be included here; it should go on the employment pages.
These boxes can be completed on a paper return. However, the same principle applies and when the tax office is processing the return, it should follow the instructions in the Self Assessment Manual: where there is an entry in box 3.98, add the amount to any entry in box 3.97 and enter the total figure in box 3.97 on screen.
Authorised mileage rates and the self employed
The Revenue has been asked whether the authorised mileage rates can be used if the vehicle is owned or registered in the name of a spouse. Although there is very little coverage on this particular point, Revenue guidance does not impose a test of ownership. The Working Together team has therefore obtained confirmation that a car registered, taxed and insured in the name of a spouse can have the benefit of the concession provided all the other conditions are met.
Scottish Widows windfall payments
The Revenue's view on the taxation treatment of the windfall payments made to policyholders with Scottish Widows when it involves a joint life policy is as follows.
For members who chose to receive cash, the total amount received is a chargeable gain, with no allowable expenditure to reduce the gain. If members chose to receive loan notes, no gain arises until the loan notes are sold or redeemed for cash.
The payments will only be made to the first-named policyholder. However, if the joint holders are in agreement that the payment is received by the first named holder on behalf of both of them, the cash or loan notes can be treated as received equally by both holders.
(Source: Working Together issue 6, August 2001.)
How the Revenue helps
Never let it be said that the grandees at the Inland Revenue do not have a sense of humour …
In the latest issue of Working Together in an article entitled 'Internet Service for PAYE – Employers', the Revenue says that it has 'recognised that some employers might not have access to the Internet'. However, all is not lost because as the article goes on to say: 'ever since the Internet service for pay-as-you-earn first became available, we offered employers an alternative way to authorise their agent to use the Internet service on their behalf.
'Details can be found at www.inlandrevenue.gov.uk/efiling/help/agentinfo.htm'. Very useful.
